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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


GIFT 


The  Railroad  Question. 


THH 


RAILROAD  QUESTION 


A   HISTORICAL   AND   PRACTICAL   TREATISE    ON 
RAILROADS,  AND  REMEDIES  FOR  THEIR  ABUSES 


WILLIAM   LARRABEE, 

LATE  GOVERNOR   OF   IOWA. 


Salus  Populi  Suprema  Lex. 


CHICAGO  r 

THE   SCHULTE   PUBLISHING  COMPANY. 

189.7. 


Copyright,   1893, 


WILLIAM  LAKRABEE. 


DONOHUE  &  HENNEBERRY, 

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PREFACE. 

THE  people  of  the  United  States  are  engaged  in 
the  solution  of  tiie  railroad  problem.  The  main 
question  to  be  determined  is:  Shall  the  railroads  be 
owned  and  operated  as  public  or  as  private  property  ? 

Shall  these  great   arteries  of  commerce   be  owned   and 

.        f 
controlled  by  a  few  persons  for    their   own  private    use 

and  gain,    or  shall   they  be  made  highways   to    be   kept 

under  strict  government  control  and  to  be  open  for  the  use 

of  all  for  a  fixed,  equal  and  reasonable  compensation? 

In  a  new  and  sparsely  settled  country  which  is  rich  in 
natural  resources  there  may  be  no  great  danger  in  pursu- 
ing a  laissez-faire  policy  in  governmental  affairs,  but  as 
the  population  of  a  commonwealth  becomes  denser,  the 
(luickened  strife  for  property  and  the  growing  complexity 
of  social  and  industrial  interests  make  an  extension  of  the 
functions  of  the  state  absolutely  necessary  to  secure  pro- 
tection to  property  and  freedom  to  the  individual 

The  American  people  have  shown  themselves  capable 
of  solving  any  political  question  yet  presented  to  them, 
and  the  author  has  no  doubt  that  with  full  information 
upon  the  suljject  they  will  find  the  proper  solution  of  the 
railroad  problem.  The  masses  have  an  honest  purpose 
and  a  keen  sense  of  right  and  wrong.  With  them  a 
question  is  not  settled  until  it  is  settled  right 

It  must  be  conceded  that  of  all  the  great  inventions  of 
modern  times  none  has  contributed  as  much  to  ihe  pros- 
perity and  happiness  of  mankind  as  the  railroad. 

Our  age  Is  under  lasting  obligations  to  Watt  and  Steph- 
enson and  many  other  heroes  of    industry  who  have  aided 


8  Preface. 

in  bringing  the  railroad  to  its  present  state  of  perfection. 
Tlieir  genius  is  the  product  of  our  civilization,  and  their 
legacies  should  be  shared  by  all  the  people  to  the  greatest 
extent  possible.  An  earnest  desire  to  aid  in  attaining  this 
end  has  prompted  this  contribution  to  the  literature- on  the 
subject. 

The  author  is  not  an  entire  novice  in  railroad  affairs. 
He  has  had  experience  as  a  shipper  and  as  a  railroad  pro- 
moter, owner  and  stockholder,  and  has  even  had  thrust  upon 
him  for  a  short  time  the  responsibility  of  a  director,  pres- 
ident and  manager  of  a  railroad  com  praiy.  He  has.  more- 
over, had  every  opportunity  to  familiarize  himself  with 
the  various  phases  of  the  subject  during  his  more  than 
twenty  years'  connection  with  active  legislation. 

He  came  to  the  young  State  of  Iowa  before  any  railroad 
had  reached  the  Mississippi.  Engaging  early  in  manu- 
facturing, he  suffered  all  the  inconveniences  of  pioneer 
transportation,  and  his  experience  instilled  into  him  lib- 
eral opinions  concerning  railroads  and  their  promoters. 
He  extended  to  them  from  the  beginning  all  the  assist- 
ance in  his  power,  making  not  only  private  donations  to 
new  roads,  but  advocating  also  pulilic  aid  upon  the  ground 
that  railroads  are  public  roads. 

As  a  member  of  the  Iowa  Senate  he  introduced  and 
fathered  the  bill  for  the  act  enabling  townships,  incorpor- 
ated towns  and  cities  to  vote  a  five  per  cent,  tax  in  aid 
of  railroad  construction.  He  favored  always  such  legis- 
lation as  would  most  encourage  the  building  of 
railroads,  believing  that  with  an  increase  of  competitive 
lines  the  common  law  and  competition  could  be  relied 
upon  to  correct  abuses  and  solve  the  rate  problem.  He 
has  since  become  convinced  of  the  falsity  of  this  doc- 
trine, and  now  realizes  the   truth  of  Stephenson's  saying 


that  where  combination   is  possible  competition  is  impos- 
sible. 

It  is  the  object  of  tliis  work  to  sliow  that  as  long  as  the 
railroads  are  permitted  to  be  managed  as  private  property 
and  are  used  by  their  managers  for  speculative  pur- 
poses or  other  personal  gain,  or  as  long  even  as  they  are 
used  with  regard  only  for  the  interest  of  stockholders, 
they  are  not  performing  their  proper  functions ;  and  that 
the}'  will  not  serve  their  real  purpose  until  they  1  )ecome  in 
fact  what  they  are  in  theory-,  highways  to  be  controlled 
by  the  government  as  thoroughly  and  effectually  as  the 
common  road,  the  turnpike  and  the  ferry,  or  the  post- 
office  and  the  custom-house. 

This  book  has  been  written  at  such  odd  hours  as  the 
author  could  snatch  from  his  time,  which  is  largely  occu- 
pied with  other  business.  He  is  under  obligations  to 
many  of  our  ministers  and  consuls  abroad  for  statistics 
and  other  valuable  information  concerning  foreign  railroads, 
as  well  as  to  a  number  of  personal  friends  for  other  assist- 
ance, consisting  chiefly  in  rendering  the  railroad  litera- 
ture of  Europe  accessible  to  him. 

William  Larrabee. 
Clermontj  loicu,  -Uai/,  1893. 


CONTENTS. 


I.     History  of  TuAXsroRTAxioN 17 

II.     The  History  of  Railroads 4fi 

III.     History  of  Railroads  in  the  United  States 76 

IV.     Monopoly  in  Transportation 90 

V.     Railroad  Abuses 124 

VI.     Stock  and  Bond  Inflation 163 

VII.     Combinations 189 

VIII.     Railroads  in  Politics 305 

IX.     Railroad  Literature 231 

X.     Railroad  Literature — Continued 273 

XI.  Railroads  and  Railroad  Legislation  in  Iowa.  .319 

XII.     The  Interstate  Commerce  Act 349 

XIII.  The  Rate  Question , 370 

XIV.  Remedies 389 

APPENDIX— Tables  and  Statistics 459 


LIST  OF  Authors  and  Works  Consulted  and  Quoted 


AcKWORTH.  W.  M.  -  -  The  Railways  of  Eng-land 

Adams,  C.  F.,  Jr.  -  Railroads,  Their  Orig-in  and  Problems 
Adams,  H.  C.       -  -  •  -  -  Public    Debts 

Adams,  Henry       -  -  History  of  the  United  States 

Atkinson,  Edward  -  -  The  Distribution  of  Pi-oducts 
Bagehot.  Walter  -  -  The  Eng-lish  Constitution 

liAKER,  C.  W.    "         -  -  Monopolies  and  the  People 

Beach,  Charles  F.,  Jr.  -  On  Private  Corporations 

Blackstone,  W.  -  Commentaries  on  Laws  of  Eng'land 
Boisted,  C.  a.  -  The  Interference  Theory  of  Govei'nment 
BoLLES,  Albert  S.  -  -  Bankers"  Mag-azine 

BoNHAM,  John  M.         -  Railway  Secrecy  and   Trusts 

Bryce,  James  -  -     The   American    Commonwealth 

Buckle,  H.  T.  -         History  of  Civilization  of  England 

Carey,  H.  C.  -  -  Principles  of  Social  Science 

"  "  -  -  -  -  Unity  of  Law 

Gary,  M.     View  of   System   of   Pennsylvania  Internal    Im- 
provements. 
Cloud,  D.  C.  -  -  Monopolies  and  the   People 

Clews,  Henry  -  Twenty-eight  Years  in  Wall  Street 

CooLEY,  Thomas  M.  -  Constitutional    Limitations 

Congressional  Record. 

Compilation  of  English  Laws  upon  Railways  . 
Dabney,  W.  D.         -         The  Public  Regulation  of  Railways 
Dillon,  Sidney  -  -  North   American  Review 

Dorn,  Alexander         -  Aufgaben  der  Eisenbahnpolitik 

Draper,  J.  W.  -  •        Intellectual  Development  of  Europe 

Encyclopedia,  American. 
Encyclopedia  Britannica. 

Encyclopadie    (Roll's)  des  Eisenbahnwesens,  1892. 
FiNDLAY,  George,     Working   and    Management  of  English 

Railways. 
Fink,  Albert        -  Cost  of  Railroad  Transportation,  etc. 

Fisher.  G.  P.  -  -  Outlines  of  Universal  History 

13 


14      List  of  Aufhors  und  Worku  Consaltcd  and  Quoted. 


FiSK.  John        -  -  -  American  Political  Ideas 

"  "  -  Critical  Period  of  American  History 

Foreign  Commerce  of  American  Republics  and  Colonies. 


Graham,  Wm. 
Gibbon,  Edward 
Gkeen,  John  K. 
Gilpin,  Wm. 
Grinnell,  J.  B. 
GuNTON,   George 
GuizoT,  M. 
Habour,  Theodor 
Hadley,  a.  T. 


Socialism  Old  and  New 

Decline  and  Fall  of  the  Roman  Empire 

History  of  English  People 

The    Cosmopolitan    Railway 

Men  and  Events  of  Forty  Years 

Wealth   and    Progress 

History  of  Civilization 

Geschichte  des  Eisenbahnwesens 

Railway   Transportation 


Hall's  Life  of  Prince  Bismarck. 


Hudson,  J.  T. 
Jeans,  J.  S. 
Jervis,  John  B. 
Jevons,  W.  S. 
Kpmx,  James 

KlRKJNIAN,  M.  M. 

Leckey,  W.  E.  H, 
Lieber,  Francis 


Lodge,  H.  C. 
Martineau,  Harriet 
McMaster,  J.  B. 
Macaulay,  T.  B. 
Motley,  J.  L. 


The  Railways  and  the  Republic 

Railway  Problems 

Railway  Property 

Methods  of  Social  Reform 

Commentaries  on  American  Law 

Railway  Rates  and   Government   Control 

and  other  works. 

England  in  Eighteenth  Century 

Political  Ethics 

Civil  Liberty  and  Self-Government 

Miscellaneous  Essays 

Life  of  General  Washington 

History  of  England 

History  of  People  of  United  States 

History  of  England 

The  Dutch  Republic 

The  United  Netherlands 

The   Elements   of   Railroading 

Natural  Resoiirces  of  the  United  States 

'     The   Farmer's   Side 


Paine,   Charles 
Patten,  J.  H. 
Peffer,  W.  A. 
Poor's  Railway  Manual, 

Porter,  Horace        -        -         -         North  American  Review 
Rawlinson,  George  -  -  Seven  Great  Monarchies 

Redfield  -  -  -  -  On  Law  of  Railways 

Records  of  Central  Iowa  Traffic  Association,    1886-1887. 
Records  of  Association  of  General  Freight  Agents  of 
the  West. 


List  of  Aiifliora  and  Wurks  Coumtltn/  mii/  Qituftd .      15 


Rkcords  of  Joint  Wp:.stehx  Classification  Committees. 

Reports  of  State  Boards  of  Commissioners. 

Report  of  Heprurn  Committee.  - 

Reports  of  UxriEn  States  Census. 

Report  of  Windom  Committee. 

Report  of  Bankers'  Association,  18<t2. 

Report  of  Cullom  Committee. 

Roemer,  Jean  -  -  Orig-in  of  English  People,  etc. 

Reubeaux,  F.         -         -       Der  Weltverkehr  und  seine  Mittel 

Richardson.  D.  N.  -         -  A  Girdle  Round  the  Earth 

Rogers,   James   E.  Tiiokold.     Economic    Interpretation    of 

History. 
RosCHER,  Wm.  ...  Political    Economy 

ScHREiBER      -        -  -  Die  Preussischen  Eisenbahnen 

ScHURZ,  Carl,  .  -  -  Life  of   Henry    Clay 

Smith,  Adam         .  .  -  .  Wealth  of  Nations 

Spelling,  T.  Carl        .        -        -        On  Private  Corporations 
Spencer,  Herbert        -  -  -  Synthetic  Philosophy 

Stern,  Simon.     Constitutional   Histoi-y  and  Political  Devel- 
opment of  the  United  States. 
vSticknet,  a.  B.  -  -  -  The  Railroad  Problem 

Statistiques  des  Chemins  de  Fer  de  l'  Europe.  1883. 
Taylor,  Hannis.     Origin  and  Growth  of  the  English  Con- 
stitution. 
The  American  Railway.     Published  by  Charles  Scribner's 

Sons . 
Veeschoyle,  Rev.  J.         -         History  of  Ancient  Civilization 
VoN  Weber,  M.  M.      -     Privat-,  Staats-  und  Reichs-Bahnen 
"  '*  "     "     -       Nationalitat  und  Eisenbahn  Politik 

VoN  DER  Legen,  Alfred.     Die   Nordamerikanischen  Eisen- 
bahnen. 
Walker.  Aldace  F.         -         -        -        -        -        The  Forum 
Weeden,    W.    B.      Economic    and    Social    History   of   New 
England. 


THE  RAILROAD  QUESTION. 


CHAPTER  I. 

HISTORY  OF    TRANSPORTATION. 

WHILE  the  prosperity  of  a  country  depends  largely 
upon  its  productiveness,  the  importance  of 
proper  facilities  for  the  expeditious  transportation  and"]^ 
ready  exchange  of  its  various  products  can  scarcely  be 
overrated.  The  free  circulation  of  commercial  com- 
modities is  as  essential  to  the  welfare  of  a  people  as  is 
the  unimpaired  circulation  of  the  blood  to  the  hunlan 
organism. 

The  interest  taken  by  nian  in  the  improvement  of  the 
roads  over  which  he  must  travel  is  one  of  the  chief  indi- 
cations of  civilization,  and  it  might  even  be  said  that  the 
condition  of  the  roads  of  a  country  shows  the  degree  of 
enlightenment  which  its  people  have  reached.  The  track- 
less though  ver}'  fertile  regions  of  Central  Africa  have 
for  thousands  of  years  remained  the  seat  of  savages ;  but 
no  nation  that  established  a  sj'stem  of  public  thorough- 
fares through  its  dominion  ever  failed  to  make  a  distin- 
guished figure  in  the  theater  of  the  world.  There  are 
some  authors  who  go  even  so  far  as  to  call  the  high  roads 
of  commerce  the  pioneers  of  enlightenment  and  political 
eminence.  It  is  true  that  as  roads  and  canals  developed 
the  commerce  of  Eastern  Asia  and  Europe,  the  attention 
of  their  people  was  turned  to  those  objects  which  distin- 
guish cultured  nations  and  lead  to  political  consequence 
among  the  powers  of  the  world.     The  systems  of  roads 

17 


18  The    Rallroiul    (,)nr.<f!<,u . 


and  canals  which  wo  find  among  those  ancients  who 
achieved  an  advanced  state  of  civilization  might  well  put 
to  shame  the  roads  which  disgraced  not  a  few  of  tiu; 
European  states  as  late  as  the  eighteenth  century. 

Among  the  early  nations  of  Asia  of  whose  internal 
affairs  we  have  any  historic  knowledge  are  the  Hindoos, 
the  Assyrians  and  Babylonians,  the  Phoenicians,  the  Per- 
sians and  the  Chinese. 

The  wealth  of  India  was  proverbial  long  before  the 
Christian  era.  She  supplied  Nineveh  and  Babylon,  and 
later  Greece  and  Borne,  with  steel,  zinc,  pearls,  precious 
stones,  cotton,  silk,  sugar-cane,  ivory,  indigo,  pepper, 
cinnamon,  incense  and  other  commodities.  If  we  accept 
the  testimony  of  the  Vedas,  the  religious  books  of  the 
ancient  Hindoos,  a  high  degree  of  cnlture  must  have  pre- 
vailed on  the  shores  of  the  Ganges  more  than  three  thou- 
sand years  ago.  Highways  were  constructed  by  the  state 
and  connected  the  interior  of  the  realm  with  the  sea  and 
the  countries  to  the  northeast  and  northwest.  For  this 
purpose  forests  were  cleared,  hills  leveled,  bridges  built 
and  tunnels  dug.  But  the  broad  statesmanship  of  tJie 
Hindoo  did  not  pause  here.  To  administer  to  the  conven- 
ience and  comfort  of  the  wayfaring  public,  and  thus  still 
more  encourage  travel  and  the  exchange  of  commodities, 
the  state  proceeded  to  line  these  public  roads  with  shade 
trees,  to  set  out  mile-stones,  and  to  establish  stations 
provided  with  shady  seats  of  repose,  and  wells  at  which 
humane  priests  watered  the  thirsty  beasts. 

At  intervals  along  these  routes  were  also  found  com- 
modious and  cleanly-kept  inns  to  give  shelter  to  the 
traveler  at  night.  Buddha,  the  great  religious  reformer 
of  the  Hindoos,  commended  the  roads  and  moiuitain 
passes  of  the  countrj-  to  the  care  of  the  pious,  and  the 


I/isfiiri/   (>/'    Tnoisjtortafiott,  19 

Greek  geographers  speak  with  high  praise  of  the  excel- 
lence of  the  public  highways  of  Hindostan. 

Among  Jthe  Babylonians  and  Assyrians  agriculture, 
trade  and  comuierce  flourished  at  an  almost  equally  remote 
period.  The  ancient  inhal)itants  of  Mesopotamia  cultivated 
the  soil  with  the  aid  of  dikes  and  canals,  and  were  experts 
in  the  manufacture  of  delicate  fabrics,  as  linen,  muslin  and 
silk.  To  them  is  attributed  the  invention,  or  at  least  the 
perfection,  of  the  cart,  and  the  first  use  of  domestic  ani- 
mals as  beasts  of  burden.  Their  cities  had  well-built  and 
commodious  streets,  and  the  roads  which  connected  them 
with  their  dependencies  aided  to  make  them  the  busy 
marts  of  Southeastern  Asia. 

During  the  later  Babylonian  Empire  immense  lakes 
were  dug  for  retaining  the  water  of  the  Euphrates,  whence 
a  net-work  of  canals  distributed  it  over  the  plains  to  irri- 
gate the  land ;  and  quaj's  and  l)reakwaters  were  constructed 
along  -the  Persian  (hilf  for  the  encouragement  of 
commerce.  While  highways  among  the  Babylonians 
served  the  development  of  agriculture  and  the  exchange 
of  industrial  commodities,  they  were  constructed  chieflj^ 
for  strategic  purposes  by  the  more  war-like  Assyrians, 
whose  many  wars  made  a  s^^stem  of  good  roads  a  necessity. 
The  Greek  geographer  Pausanias  was  shown  a  well-kept 
military  road  upon  which  Memnon  was  said  to  have 
marched  with  an  Assj'rian  army  from  Susa  to  Troy  to 
rescue  King  Priam.  Traces  of  this  road,  called  by  the 
natives  "  Itaki  Atabeck, "  may  be  seen  to  this  day. 

The  Phoenicians,  who  were  the  first  of  the  great  historic 
maritime  nations  of  antiquity,  occupied  the  narrow  strip 
of  territcrj'  between  the  mountains  of  Northern  Palestine 
and  the  Mediterranean  Sea.  From  their  situation  they 
learned  to  reh'  upon  the  sea  as  their  principal   highway. 


20  The  Rail  road  Question. 


They  transported  to  the  islands  of  the  Mediterranean  as 
well  as  the  coast  of  Northern  Africa  and  Southern  Europe 
heavy  cargoes  consisting  of  the  product  of  thejr  own  skill 
and  industry  as  well  as  of  the  manifold  exports  of  the  east. 
They  sailed  even  beyond  the  "  Pillars  of  Hercules"  into 
the  Atlantic  Ocean  and  the  North  Sea.  Through  their  hands 
' '  passed  the  gold  and  pearls  of  the  east  and  the  purple 
of  Tyre,  slaves,  ivory,  lion  and  panther  skins  from  the 
interior  of  Africa,  frankincense  from  Arabia,  the  linen  of 
Egypt,  the  pottery  and  fine  wares  of  Greece,  the  copper 
of  Cyprus,  the  silver  of  Spain,  tin  from  England,  and  iron 
from  Elba." 

But  while  the  Phoenicians  for  their  commercial  inter- 
course with  other  nations  relied  chiefly  upon  the  sea,  the 
great  highway  of  nature,  they  neglected  by  no  means  road- 
building  at  home.  They  connected  their  great  cities,  Sidon 
and  Tyre,  by  a  coast  road,  which  the}"  extended  in  time  as 
far  as  the  Isthmus  of  Suez.  They  also  established  great 
commercial  routes  by  which  their  merchants  penetrated 
the  interior  of  Europe  and  Asia.  Caravan  roads  extended 
south  to  Arabia  and  east  to  Mesopotamia  and  Armenia, 
penetrating  the  whole  Orient  as  far  as  India,  and  even 
the  frontiers  of  China.  The  Phcenicians  thus  became  the 
traders  of  antiquity,  Tyre  being  the  link  between  the  east 
and  the  west. 

The  Persian  Empire,  which  under  Darius  stretched 
from  east  to  west  for  a  distance  of  8,000  miles  and  com- 
prised no  less  than  two  million  square  miles,  with  a  pop- 
ulation of  seventy  or  eighty  millions,  had,  with  the  excep- 
tion of  the  Romans,  perhaps  the  best  system  of  roads 
known  to  ancient  history.  Indeed,  it  is  doubtful  whether 
without  it  such  a  vast  empire,  more  than  half  as  large  as 
modern  Europe,   could  have  been   held   together.      Each 


Ifi.sfori/   I  if   Trditsportatuni .  21 

satrap,  or  prefect  of  a  province,  was  obliged  to  make 
regular  reports  to  the  king,  who  was  also  kept  informed 
by  spies  of  what  was  taking  place  in  everj*  part  of  the 
empire.  To  aid  the  administration  of  the  government, 
postal  communic4ition  for  the  exclusive  use  of  the  king 
and  his  trusted  servants  connected  the  capital  with  the 
distant  proAinces.  This  postal  service  was,  four  or  five 
centuries  later,  patterned  after  by  the  Romans.  From 
Susa  to  Sardes  led  a  royal  road  along  which  were  erected 
caravansaries  at  certain  intervals.  Over  this  road,  1,700 
miles  long,  the  couriers  of  the  king  rode  in  six  or  seven 
days.  Under  Darius  the  roads  of  the  empire  were  sur- 
veyed and  distances  marked  by  means  of  mile-stones, 
many  of  which  are  still  found  on  the  road  which  led  from 
Ecbatana  to  Bal)yl(^n.  These  roads  crossed  the  wildest 
regions,  of  that  great  monarchy.  They  connected  the 
cities  of  Ionia  witii  Sardes  in  Lydia,  with  Babylon  and 
with  the  royal  cit^^  of  Susa;  they  led  from  Syria  into 
Mesopotamia,  from  Ecbatana  to  Persepolis,  from  Armenia 
into  Southern  Persia,  and  thence  to  Bactria  and  India. 
The  Chinese  commenced  road-building  long  before  the 
Christian  era.  They  graded  the  roadway  and  then  covered 
the  whole  with  hewn  blocks  of  stone,  carefully  jointed 
and  cemented  together  so  that  the  entire  surface  pre- 
sented a  perfectly  smooth  plane.  Such  roads,  although 
very  costly  to  build,  are  almost  indestructible  by  time. 
In  China,  as  well  as  in  several  other  countries  of  Asia, 
the  executive  power  has  always  charged  itself  with  both 
the  construction  and  maintenance  of  roads  and  navigable 
canals.  In  the  instrf  :'tions  which  are  given  to  the  gov- 
ernors of  the  various  provinces  these  objects,  it  is  said, 
are  constantly  comm3nded  to  them,  and  the  judgment 
which   the  court  forras  of  the  conduct  of  each   is  very 


The    Railroad   Question. 


much  regulated  l)y  tlie  attention  which  he  appears  to 
have  paid  to  this  part  of  his  instructions.  This  solicitude  of 
the  sovereign  for  the  internal  thoroughfares  is  easily 
accounted  for  when  it  is  considered  that  his  revenue  arises 
almost  entirely  from  a  land-tax,  or  rent,  which  rises  and 
falls  with  the  increase  and  decrease  of  the  annual  produce 
of  the  land.  The  greatest  interest  of  the  sovereign,  his 
revenue,  is  therefore  directly  connected  with  the  cultiva- 
tion of  the  land,  with  the  extent  of  its  produce  and  its 
value.  But  in  order  to  render  that  produce  as  great  and 
as  valuable  as  possible,  it  is  necessary  to  procure  for  it  as 
extensive  a  market  as  possible,  and,  consequently,  to 
establish  the  freest,  the  easiest  and  the  least  expensive 
communication  between  all  the  different  parts  of  the 
country,  which  can  be  done  only  l)y  means  of  the  best 
roads  and  tiie  best  navigable  canals. 

In  Africa  the  Egyptians  and  Carthaginians  are  the  only 
nations  of  antiquity  of  which  we  have  much  historic 
knowledge.  The  former  kept  up  a  very  active  commerce 
not  only  with  the  south,  but  also  with  the  tribes  of  Lydia 
on  the  west  and  with  Palestine  and  the  adjoining  countries 
on  the  east.  To  facilitate  commerce,  they  constructed 
and  maintained  a  number  of  excellent  highways  leading 
in  all  directions.  One  of  the  most  important  among  these 
was  the  old  royal  road  on  the  coast  of  the  Mediterranean 
Sea,  or  the  "Road  of  the  Philistines"  of  the  Scriptures. 
This  road  crossed  the  Isthmus  of  Suez  and  led  through 
the  land  of  the  Philistines  and  Samaria  to  Tyre  and  Sidon. 
Another  road  led,  in  a  northwesterly  direction,  from 
Rameses  to  I^elusium.  This,  however,  crossed  marshes, 
lagoons  and  a  whole  system  of  canals,  and  was  used 
only  by  travelers  without  baggage,  while  the  Pharaohs, 
accompanied  by  their   horses,    chariots  and  troops,   pre- 


History  of  Transportation.  23 

ferred  the  foriuei-  road.  A  tliinl  road  led  from  Coptos, 
on  the  Nile,  to  Berenice,  on  the  Red  Sea.  There  were 
between  these  two  cities  ten  stations,  about  twenty- five 
miles  apart  from  each  other,  where  travelers  might  rest 
with  their  camels  each  day,  after  traveling  all  night,  to 
avoid  the  heat.  Still  another  road  led  from  the  town  of 
Babylon,  opposite  Memphis,  along  the  east  bank  of  the 
Nile,  into  Nubia.  Much  of  the  commerce  of  Egypt  in 
ancient  times,  as  in  our  day,  was  conducted  on  the 
Nile  and  its  canals.  The  boatman  and  the  husbandman 
were,  in  fact,  the  founders  of  the  gentle  manners  of  the 
people  who  flourished  four  thousand  years  ago  in  the 
blessed  valley  of  the  Nile.  There  is  one  canal  among  the 
many  which  deserves  special  mention.  It  flowed  from  the 
Bitter  Lakes  into  the  Red  Sea  near  the  city  of  Arsinoe. 
It  was  first  cut  by  Sesostris  before  the  Trojan  times,  or, 
according  to  other  writers,  by  the  son  of  Psammitichus, 
who  only.began  the  work  and  then  died.  Darius  I.  set 
about  to  complete  it,  but  gave  up  the  undertaking  when 
it  was  nearly  finished,  influenced  by  the  erroneous  opinion 
that  the  level  of  the  Red  Sea  was  higher  than  Egypt,  and 
that  if  the  whole  of  the  intervening  isthmus  were  cut 
through,  the  country  would  be  overflowed  by  the  sea. 
The  Ptolemaic  kings,  however,  did  cut  it  through  and 
placed  locks  upon  the  canal. 

-  Carthage  was  a  Phcenician  colony.  The  city  was 
remarkable  for  its  situation.  It  was  surrounded  by  a 
very  fertile  territory  and  had  a  harbor  deep  enough  for 
the  anchorage  of  the  largest  vessels.  Two  long  piers 
reached  out  into  the  sea,  forming  a  double  harbor,  the 
outer  for  merchant  ships  and  the  inner  for  the  navy. 
This  -city  early  became  the  head  of  a  North  African 
empire,  and  her  fleets  plied  in  all  navigable  waters  known 


24  The  Railroad  Question . 


to  antiquity.  Her  navy  was  the  largest  in  the  world,  and 
in  the  sea-fight  with  Regains  comprised  three  hundred 
and  fifty  vessels,  carrying  one  hundred  and  fifty  thousand 
men.  Though  we  have  but  meager  accounts  of  the 
internal  aflfairs  of  Carthage,  there  can  be  no  doubt  that 
much  attention  was  given,  both  at  home  and  in  the  col- 
onies, to  the  construction  of  highways,  which  were 
distinguished  for  their  solidity.  It  is  said  that  the 
Romans  learned  from  the  Carthaginians  the  art  of  paving 
roads. 

European  history  began  in  Greece,  the  civilization  of 
whose  people  passed  to  the  Romans  and  from  them  to  the 
other  Aryan  nations  which  have  played  an  important  role  in 
the  great  historical  drama  of  modern  times.  The  physical 
features  of  the  Balkan  Peninsula  were  an  important  factor 
in  the  formation  of  the  character  of  its  inhabitants.  The 
coast  has  a  large  number  of  well-protected  bays,  most  of 
which  form  good  harbors.  Navigation  and  commerce 
were  greatly  stimulated  in  a  country  thus  favored  by 
Nature.  Nearly  all  the  principal  cities  of  Hellas  could  be 
reached  by  ships,  and  the  need  of  internal  thoroughfares 
was  but  little  felt.  Nevertheless,  public  highways  con- 
nected all  of  the  larger  towns  with  the  national  sanctuaries 
and  oracles,  as  Olympia,  the  Isthmus,  Delphi  and  Dodona. 
Athens,  after  the  Persian  wars  the  metropolis  of  Greece, 
was  by  the,  so-called  Long  Walls  connected  with  the 
Piraeus,  its  harbor.  This  highway,  protected  by  high 
walls  built  two  hundred  yards  apart,  was  over  four  miles 
long,  and  enabled  the  Athenians,  as  long  as  they  held 
the  command  of  the  sea,  to  bring  supplies  to  their  city, 
even  when  it  was  surrounded  by  an  enemy  on  the  land. 

Rome  is  the  connecting  link  between  antiquity  and 
mediaevalism.      The   great  empire    sprang  from  a  single 


History  of  Transjiortatwn .  25 

city,  whose  power  and  dominion  grew  until  it  comprised 
every  civilized  nation  living  upon  the  three  continents  then 
known.  Under  the  emperors,  the  Roman  empire  extended 
from  the  Atlantic  to  the  Euphrates,  a  distance  of  more 
than  three  thousand  miles,  and  from  the  Danube 
and  the  English  Channel  to  the  cataracts  of  the  Nile 
and  the  Desert  of  Sahara.  Its  population  was  from 
eighty  to  one  hundred  and  twenty  millions.  The  empire 
was  covered  with  a  net-work  of  excellent  roads,  which 
stimulated,  together  with  the  safety  and  peace  which 
followed  the  civil  wai's,  traffic  and  intercourse  between  the 
different  regions  united  under  the  imperial  government. 
More  than  50,00U  miles  of  solidly  constructed  highwa3's 
connected  the  various  provinces  of  this  vast  realm.  There 
was  one  great  chain  of  communication  of  4, 080  Roman  miles 
in  length  from  the  Wall  of  Antoninus  in  the  northwest  to 
Rome,  and  thence  to  Jerusalen,  a  southeastern  point  of 
the  empire'.  There  were  several  thousand  miles  of  road 
in  Italy  alone.  Rome's  highways  were  constructed  for  the 
purpose  of  facilitating  military  movements,  but  the  benefits 
which  commerce  derived  from  them  cannot  easily  be 
overestimated.  These  military  roads  were  usually  laid 
out  in  straight  lines  from  one  station  to  another.  Natural 
obstacles  were  frequently  passed  by  means  of  very  exten- 
sive works,  as  excavations,  bridges,  and,  in  some  instan- 
ces, long  tunnels.  The  resources  of  the  Roman  Empire  were 
almost  inexhaustible,  and  no  public  expenditures  were  lar- 
ger than  those  made  on  account  of  the  construction  of  new 
roads.  The  fact  that  many  of  these  roads  have  Ijome  the 
traffic  of  almost  two  thousand  years  without  material  injury 
is  a.bundant  proof  of  the  unsurpassed  solidity  of  their  con- 
struction. The  Roman  engineers  always  secured  a  firm 
bottom,     which    was    done,     when    necessary,    by  ram- 


26  The  Railroad   Question. 


.ming  the  ground  with  small  stones,  or  fragments  of 
brick.  Upon  this  foundation  was  placed  a  pavement 
of  large  stones,  which  were  firmly  set  in  cement.  These 
stones  were  sometimes  square,  but  more  frequently  irreg- 
ular. They  were,  however,  always  accurately  fitted  to 
each  other.  Many  varieties  of  stone  were  used,  but  the 
preference  was  given  to  basalt.  Where  large  blocks  could 
not  be  conveniently  obtained,  small  stones  of  hard 
quality  were  sometimes  cemented  together  with  lime, 
forming  a  kind  of  concrete,  of  which  masses  extending 
to  a  depth  of  several  feet  are  still  in  existence.  The 
strength  of  the  pavements  is  illustrated  by  the  fact  that 
the  substrata  of  some  have  been  so  completely  washed 
away  by  water,  without  disturbing  the  surface,  that  a 
man  may  creep  under  the  road  from  side  to  side  while 
carriages  pass  over  the  pavement  as  over  a  bridge.  The 
roads  were  generally  raised  above  the  ordinary  surface  of 
the  ground.  They  frequently  had  two  wagon- tracks, 
which  were  separated  by  a  raised  foot-path  in  the  center, 
and  blocks  of  stone  at  intervals,  to  enable  travelers  to 
mount  on  horseback.  Furthermore,  each  mile  was  marked 
^  by  a  numbered  post,  the  distance  being  counted  from 
the  gate  of  the  wall  of  Servius.  The  mile-post  was  at 
first  a  roughly  hewn  stone,  which  in  time  was  exchanged 
for  a  monument,  especially  in  the  vicinity  of  Rome  and 
other  large  cities.  The  most  celebrated  road  of  Italy, 
which  has  always  excited  the  admiration  of  the  student  of 
antiquity,  was  the  Via  Appia,  the  remains  of  which  are 
still  an  object  of  wonder.  It  was  first  built  from  Rome  to 
Capua  by  Appius  Claudius  Caecus  in  the  fourth  century 
before  Christ,  and  was  afterwards  continued  as  far  as 
Brundusium.  It  was  broad  enough  for  two  carriages  to 
pass  each  other,  and  was  built  of  solid  stone.     The  stones 


Histori/  of   Tnii}sj^>ort(itlnn  .  27 

wei'e  hewn  sharp  and  smooth,  and  their  corners  fitted 
into  one  another  without  the  aid  af  any  connecting  mater- 
ial, so  tliat,  according  to  Procopius,  the  whole  appeared  to 
be  one  natural  stone.  Each  side  of  the  street  had  a  high 
border  for  foot-passengers,  on  which  were  also  placed 
alternately  seats  and  mile-stones.  In  spite  if  its  age  and 
heavy  traffic  parts  of  this  road  are  still  in  a  good  state  of 
preservation.  After  the  completion  of  the  Via  Appia 
similar  roads  were  constructed,  so  that  under  the  emperors 
seven  great  highways  started  from  Rome,  viz. :  the  Via 
Appia  and  Latiua  to  the  south ;  two,  Valeria  and  Salaria, 
to  the  Adriatic;  two,  Cassia  and  Aurelia,  to  the  north- 
west ;  and  the  Via  ^-Emilia,  serving  for  both  banks  of  the 
?o. 

Nor  were  the  provinces  by  any  means  neglected.  Dur- 
ing the  last  Punic  war  a  paved  road  was  constructed  from 
Spain  through  Gaul  to  the  Alps,  and  similar  roads  were 
afterwards  built  in  every  part  of  Spain  and  Gaul,  through 
Illyricum,  Macedonia  and  Thrace,  to  Constantinople,  and 
along  the  Danube  to  its  mouths  on  the  Black  Sea.  So, 
likewise,  were  the  islands  of  Sardinia,  Corsica,  Sicily  and 
Great  Britain  crossed  by  them.  It  has  justly  been  said ' 
that  the  roads  of  the  Roman  Empire,  whose  strong  net- 
work enlaced  the  known  world,  were  the  architectural 
glory  of  its  people.  These  military  roads  caused  in  the 
various  parts  of  the  empire  a  wonderful  social  and  com- 
mercial revolution.  They  made  it  possible  for  civilization 
to  penetrate  into  the  most  remote  retreats  and  to  conquer 
their  inhabitants  more  completely  than  could  Ciesar  at  the 
head  of  his  legions. 

The  Romans  also  had  an  efficient  postal  service,  which 
was  first  instituted  by  Augustus  and  greatly  improved  by 
Hadrian.      The  tVn-mer,  as  Gibbon  states  in  his  "Decline 


28  The  Railroad  Question. 


and  Fall  of  the  Roman  Empire,"  placed  upon  all  roads 
leading  away  from  the  golden  milestone  of  the  Forum,  at 
short  distances,  relays  of  young  men  to  serve  as  couriers, 
and  later  provided  vehicles  to  hurry  information  from  the 
provinces.  These  posts  facilitated  communication  through 
all  parts  of  the  empire,  and  while  they  were  originally 
established  in  the  interest  of  the  government,  they  proved 
serviceable  to  individuals  as  well,  for  there  is  no  doubt 
that,  together  with  the  official  dispatches,  every  courier 
carried  private  letters  also. 

The  expenses  of  the  post  were  largely  defrayed  by  the 
cities  through  which  it  passed,  these  cities  being  obliged 
to  provide  the  stations  established  within  their  territories 
with  the  necessary  stores.  At  the  principal  stations  were 
found  inns,  where  the  proprietors  were  held  responsible 
for  injuries  suffered  bj'  travelers  while  in  their  houses. 

The  communication  of  the  Roman  Empire  was  scarcely 
less  free  and  open  by  sea  than  it  was  by  land.  Italy  has 
by  nature  few  safe  harbors,  but  the  energy  and  industry 
of  the  Romans  corrected  the  deficiencies  of  nature  by  the 
construction  of  several  artificial  ports. 

After  the  downfall  of  the  Roman  Empire  its  roads 
were  either  destroyed  by  the  people  through  whose  terri- 
tories they  led  or  by  the  conquerors,  to  render  more  diflS- 
cult  the  approach  of  an  enemy. 

Civilization  and  commerce  greatly  suffered  through  the 
downfall  of  Rome,  and  did  not  again  revive  until  after  the 
struggles  of  the  Northern  Christian  races  with  the  Southern 
and  Eastern  nations,  which  had  become  Mohammedan. 
The  sixth  and  seventh  centuries  were  the  darkest  in  the 
history  of  Europe.  Charlemagne,  toward  the  close  of 
the  eighth  century,  caused  many  of  the  old  Roman  roads 
to  be  repaired  and   new  ones  to  be    constructed.       He, 


Ifistor//   of   Tniii^j)()rlatl(>n. 


as  well   as  several  of    his  immediate    successors,    made 
use    of    mounted    messengers    to    send    imperial   man- 
dates  from   one   part  of  the  realm  to  the   other.     The 
rulers   of   the  succeeding  centuries  did  not   profit,  how- 
ever,   by  this   example,   and    the    roads   of    the   empire 
again  fell  into  decay.     Moreover,   the  public  safety  was 
greatly  impaired  by  robbers  and  feudal    knights,    whose 
depredations  were  so  heavy  a  tax  upon  commerce  as   to 
greatly  discourage  it.       Trade  under  these  circumstances 
would  have  been  entirely  destroyed,    had  it  not  been  for 
the  merchants'   unions  which  were   formed  by  the  larger 
cities  for  the  protection  of  their  interests.      These  organi- 
zations maintained  the  most  important  thoroughfares,  and 
even  furnished  armed  escorts  to    wayfaring    merchants. 
Commerce  thus  flourished  in,  and  commercial  relations  were 
kept  up  among,  the  cities  immediate   between  Venice  and 
Genoa,    as  well  as  the  cities  on  the  Rhine  and  Danube. 
Florence,  Verona,  Milan,  Strasburg,  Mayence,  Augsburg, 
Ulm,   Ratisbon,  Vienna  and  Nuremberg  were  flourishing 
marts,   and  through   them   flowed    the  currents   of  trade 
between  the  north  and  the  south.    Out  of  these  commercial 
unions  grew  in  time  the  Hanseatic  League,    which  from 
the  thirteenth  to  the  fifteenth  century  controlled  the  com- 
merce of  the  northern  part  of  Europe  on  both  the  water 
and  the  land.      The  object  of  this  league,    which  at  the 
height  of  its  power  included  eighty-five  cities,  was  to  pro- 
tect its  members  against  the  feudal  lords  on  the  land  and 
against  pirates  on  the  sea.    Its  power  extended  from  Norway 
to  Belgium  and  from  England  to  Russia.      In  all  the  princi- 
pal towns  on  the  highways  of  commerce  the  flag  of  the  Hansa 
floated  over  its  counting  houses.       Wherever  its  influcnc  ^ 
reached,  its  members  controlled  roads,  mines,   agriculture 
and  manufactures.    It  often  dictated  terms  to  kings,  and 


30  The   RdHnxnJ   Question. 


almost  succeeded  in  monopolizing  the  trade  of  Europe 
north  of  Italy. 

It  is  characteristic  of  the  social  and  political  condition 
of  this  time  that  the  postal  service  was  not  carried  on  l)v 
the  state,  but  was  in  the  hands  of  the  various  municipal- 
ities, convents  and  universities.  During  the  fifteenth  and 
sixteenth  centuries  national  power  and  national  life  made 
themselves  felt,  and  with  a  change  in  the  political  system  the 
system  of  communication  and  transportation  changed  also. 
Louis  XI.  of  France  took  the  first  step  toward  making  a 
nation  of  the  French  when  he  transferred  the  postal  service 
from  the  cities  and  other  feudal  authorities  to  the  state. 
Two  or  three  centuries  later,  France  obtained  a  national 
system  of  roads  and  canals.  The  idea  was  largely  due  to 
Colbert,  the  minister  of  Louis  XIV.  It  was,  however, 
not  executed  in  detail  until  the  middle  of  the  last  cen- 
tury. Many  abuses  grew  up  in  connection  with  it,  but  on 
the  whole  it  was  probably  the  soundest  and  most  efficient 
part  of  the  French  administration.  A  system  of  lines  of 
communication,  radiating  from  Paris,  was  constructed  by 
skilled  engineers,  and  placed  under  the  supervision  of 
men  of  talent,  especially  trained  for  the  purpose  at  the 
Ecole  des  Pouts  et  Chaussees.  The  whole  system  was 
further  improved  by  Napoleon,  and  has  served  as  a  basis 
for  the  present  system  of  railroad  supervision. 

The  first  artificial  waterway  constructed  in  France  was 
the  Languedoc  Canal,  connecting  the  Bay  of  Biscay  with 
the  Mediterranean.  This  gigantic  work,  designed  by 
Eiquet,  was  commenced  in  1G66,  and  completed  in  1681. 
The  canal  is  148  miles  long  and  its  summit  level  is  600 
feet  above  the  sea,  the  works  along  its  line  embracing 
over  one  hundred  locks  and  fifty  aqueducts.  A  large 
number  of  canals  have  since  been  constructed,  and  France 


Hisfnrfi    of    Trini>ipnrfafi(in.  31 

has  at  present  over  4,000  miles  of  artificial  waterways, 
or  more  than  any  other  country  of  Europe. 

Nowhere  else  was  tiie  same  completeness  of  organiza- 
tion possible.  The  regular  mail  service  of  Germany  dates 
back  to  the  year  of  lolG,  when  Emperor  Maximilian 
established  a  postal  route  between  Brussels  and  Vienna 
and  made  Francis  Count  of  Taxis  Imperial  Postmaster- 
General.  The  postal  service  of  the  empire  greatly 
improved  up  to  the  time  of  the  Thirty  Years'  War,  which 
completely  demoralized  it.  After  the  war  the  individual 
states  and  free  cities,  usurping  imperial  prerogatives, 
established  postal  routes  of  their  own  and  thereby  crippled 
the  national  service.  The  same  war  also  did  great  damage 
to  the  public  thoroughfares,  and  the  commercial  and 
manufacturing  interests  of  the  German  empire  were  until 
the  end  of  the  eighteenth  century  in  a  deplorable  condi- 
tion. Frederick  the  Great,  recognizing  the  fact  that  the 
industrial  paralysis  of  Germany  was  owing  chiefly  to  its 
defective  means  of  communication,  commenced  to  con- 
struct turnpikes  and  canals  in  Prussia,  and  the  minor 
German  princes  one  by  one  imitated  his  example,  until 
the  Napoleonic  wars  again  put  an  end  to  internal  improve- 
ments. The  good  work  was  resumed,  however,  after  the 
downfall  of  Napoleon,  and  in  1830  Germany  was  inter- 
crossed by  from  three  to  four  thousand  miles  of  turn- 
pike. 

In  the  Netherlands  canals  were  constructed  as  early  as 
the  twelfth  century.  Being  particularly  well  adapted  to 
the  fl^at  country  of  Holland,  they  were  rapidh'  extended 
until  they  connected  all  the  cities,  towns  and  villages  of 
the  country,  and  to  a  large  extent  took  the  place  of 
roads.  The  largest  canal  of  Holland  is  the  one  which 
connects  the  cit}-  of  Amsterdam  with  the  North  Sea.      It 


32  The  Railroad  Qncation. 

was  constructed  between  the  years  of  1819  and  1825  at 
an  expense  of  more  than  four  million  dollars.  The  city 
of  Amsterdam  owes  to  this  canal  its  present  commercial 
prosperity. 

Puljlic  roads  and  the  state  postal  service  are  of  com- 
paratively recent  origin  in  G-reat  Britain.  The  first  pub- 
lic postal  route  was  established  in  1635,  during  the  reign 
of  Charles  I.  In  1678  a  public  stage-coach  route  was 
established  between  Edinburgh  and  Glasgow.  The  dis- 
tance is  only  forty-four  miles,  1)ut  the  roads  were  so  bad 
that,  though  the  coach  was  drawn  by  six  able  horses,  the 
journey  took  three  days.  It  was  considered  a  great 
improvement  when  in  1750  it  could  be  completed  in  half 
the  time  originall}'  required.  In  1763  a  mail-coach  made 
only  monthly  trips  between  London  and  Edinburgh,  eight 
long  days  being  required  for  the  journey,  which  to-day  is 
made  in  less  than  twelve  hours.  The  number  of  stage 
passengers  between  these  two  capitals  averaged  about 
twenty-five  a  month,  and  rose  to  fifty  on  extraordinary 
occasions.  In  those  days  coaches  were  very  lieav}'  and 
without  springs,  and  travelers  not  unfrequently  cut  short 
their  journe3's  for  want  of  conveniences. 

Turnpikes  in  Great  Britain  do  not  even  date  as  far 
back  as  stage-coaches.  It  is  true  the  first  turnpike  act 
was  passed  as  early  as  1653,  but  the  s^'stem  was  not 
extensively  adopted  until  a  centuiy  later.  Previous  to 
that  time  the  roads  of  England,  such  as  they  were, 
were  maintained  by  parish  and  statute  labor.  In  the  lat- 
ter half  of  the  last  century,  under  improved  methods  of 
construction,  turnpike  roads  multiplied  rapidly.  Both 
roads  and  vehicles  attained,  previous  to  the  advent  of  the 
railroads,  such  a  degree  of  perfection  that  the  stage-coach 
made  the  journey  between   London  and  Manchester,  178 


IL'sfnn/   of   Transportatio)) .  33 

miles,  in  19  hours;  between  London  and  Liverpool,  203 
miles,  in  less  than  21  hours;  and  between  London  and 
Hol3'head,  261  miles,  in  less  than  27  hours. 

In  spite  of  these  improved  facilities,  the  transportation 
of  merchandise  continued  to  be  very  expensive.  Goods 
had  to  be  conveyed  from  town  to  town  by  heavy  wagons, 
and  the  cost  of  land-carriage  between  Manchester  and 
Liverpool,  a  distance  of  thirty  miles,  was  at  times  as  high 
as  forty  shillings  per  ton. 

The  various  disadvantages  of  land  transportation  direct- 
ed, toward  the  middle  of  the  last  century,  the  attention  of 
the  British  people  to  the  importance  of  a  system  of  canals. 
They  realized  that  these  water  highways  w^ould  open  an 
easier  and  cheaper  communication  between  distant  parts 
of  the  counts:}",  thus  enabling  manufacturers  to  collect 
their  materials  and  fuel  from  remote  districts  with  less 
labor  and  expense,  and  to  convey  their  goods  to  a  more 
distant  and  more  profitable  market.  It  would  also  facili- 
tate the  conveyance  of  farm  produce  to  a  greater  distance 
and  would  thereb}^  benefit  both  the  producer  and  consumer. 
The  canal  era  was  formallj^  inaugurated  in  1761,  when  the 
Duke  of  Bridgewater  presented  to  Parliament  a  petition  for 
a  bill  to  construct  the  canal  which  has  sin6e  borne  his  name. 
The  canal  was  commenced  in  1767  and  was  completed  in 
1772.  The  next  forty  years  were  a  period  of  great 
activity  in  canal  building,  but  it  was  left  to  private  enter- 
prise, with  ver}'  little  aid  from  the  government.  Over  a 
hundred  canal  acts  were  passed  by  Parliament  before  the 
year  1800.  The  largest  canal  of  the  British  Isles  is  the 
Caledonian,  extending  from  Inverness  to  Fort  William,  a 
distance  of  sixty- three  miles.  It  was  commenced  in  1803 
andcompletedinl847,andcost£l,256,000.  Othercanalsof 
importance  are  the  Great  Canal,  which  connects  the  North 


34  The  Railroad   Question. 


Sea  with  the  Atlantic  Ocean,  and  the  Grand  Function 
Canal,  which  is  over  one  hundred  miles  long  and  connects 
most  of  the  water-ways  of  central  England  with  the  Thames 
River.  It  is  estimated  that  there  were  over  2,200  miles 
of  navigable  canals  in  Great  Britain  before  the  intro- 
duction of  railroads. 

Canal-building  in  Spain  dates  back  to  the  beginning  of 
the  sixteenth  century,  when  Charles  V.  built  the  Imperial 
Canal  of  Aragon,  which  is  over  sixty  miles  long.  The 
political  and  commercial  decline  of  the  country  during 
the  seventeenth  and  eighteenth  centuries,  however, 
brought  the  development  of  her  highways  to  a  standstill, 
and,  with  the  exception  of  Tiuke}',  probably  no  European 
country  has  at  the  present  time  more  deficient  transpor- 
tation facilities  than  Spain. 

The  comparatively  high  state  of  civilization  which 
existed  in  the  Italian  cities  during  the  middle  ages, 
their  commercial  and  industrial  thrift  and  the  importance 
of  Rome  as  the  metropolis  of  the  Catholic  Church  com- 
bined to  maintain  many  of  the  excellent  ancient  highways 
of  Italy.  A  number  of  canals  were  built  in  Northern 
Italy  as  early  as  the  fifteenth  century,  and  it  is  claimed 
b}'  some  writers  that  locks  were  first  used  on  the  Milanese 
canals  in  1497.  But  while  public  thoroughfares  have 
always  been  well  maintained  in  Northern  Italy  and  even 
as  far  south  as  Naples,  they  were  during  the  past  two  or 
three  centuries  permitted  to  greatly  deteriorate  in  the 
southern  part  of  the  peninsula,  to  the  great  detriment  of 
both  agriculture  and  commerce.  The  condition  of  the 
large  Italian  islands  is  still  more  lamentable,  Sicily  and 
Sardinia  being  almost  entirely  devoid  of  roads.  She  that 
was  the  granary  of  ancient  Rome  to-day  scarcely  produces 
enough  grain  to  supply  her  own  people. 


Jlistorij   of  Traiixjxirtdtlon.  85 


Denmark  and  the  Scandinavian  peninsula  had  a  good 
system  of  highways  long  before  the  railroad  era.  Among 
the  many  excellent  canals  of  Sweden  may  be  mentioned 
the  Guta  Canal,  which  was  commenced  by  Charles  XII. 
in  the  early  part  of  the  last  century,  but  was  not  entirely 
completed  until  1832.  It  is,  inclusive  of  the  lakes,  118 
miles  long,  and  its  construction  cost  $3,750,000,  three- 
fifths  of  which  was  contributed  by  the  state.  This  canal 
connects  the  Baltic  Sea  with  Lake  Wener,  as  well  as, 
through  the  Gota-Elf,  with  the  North  Sea. 

Next  to  Turkey  and  Spain,  no  country  of  Europe  has 
been  as  slow  to  appreciate  the  advantages  of  a  system  of 
highways  as  Russia.  At  the  beginning  of  the  nineteenth 
century  the  vast  empire  of  the  Czar  had  but  a  few  roads 
connecting  its  principal  cities,  and  these  were  almost 
impassable  in  the  spring  and  fall.  Much  progress  has, 
however,  been  made  since  then,  and  at  present  Russia 
has  over  75,000  miles  of  wagon-road  and  artificial  water- 
way, and  19,000  miles  of  railroad.  A  road  has  been 
built  through  Siberia,  extending  from  the  Ural  Mountains 
to  the  city  of  Jakutsk  on  the  Lena  and  sending  out  many 
branch  roads  north  and  south.  The  development  of 
Russia's  resources  has  kept  pace  with  that  of  her  system 
of  highways,  and  the  agricultural  and  mineral  products  of 
that  country  are  in  the  markets  of  the  world  constantly 
gaining  ground  in  their  competition  with  the  products  of 
Western  Europe  and  America. 

Passing  now  to  the  Western  Hemisphere,  we  find  that 
in  ancient  Peru  the  Incas  built  great  roads,  the  remains 
of  which  still  attest  their  magnificence.  Probably  the 
most  remarkable  were  the  two  which  extended  from 
Quito  to  Cuzco,  and  thence  on  toward  Chile,  one  passing 
over  the  great  Plateau,   the  other  following  the  coast. 


36  Tlie  Railroad   Question. 

Humboldt,  in  his  "Aspects  of  Nature,"  says  of  tliis 
mountain  road  :  ' '  But  what  above  all  things  relieves  the 
severe  aspect  of  the  deserts  of  the  Cordilleras  are  the 
remains,  as  marvelous  as  unexpected,  of  a  gigantic  road, 
the  work  of  the  Incas.  In  the  pass  of  the  Andes  between 
Mausi  and  Loja  we  found  on  the  plain  of  Puttal  much 
difficulty  in  making  a  way  for  the  mules  over  a  marshy 
piece  of  ground,  while  for  more  than  a  German  mile  our 
sight  continually  rested  on  the  superb  remains  of  a  paved 
road  of  the  Incas,  twenty  feet  wide,  which  we  marked 
resting  on  its  deep  foundations,  and  paved  with  well-cut, 
dark  porphyritic  stone.  This  road  was  wonderful  and 
does  not  fall  behind  the  most  imposing  Roman  ways 
which  I  have  seen  in  France,  Spain  and  Italy.  By  baro- 
metrical observation  I  found  that  this  colossal  work  was 
at  an  elevation  of  12,440  feet."  The  length  of  this  road, 
of  which  only  parts  remain,  is  variouslj'  estimated  at  from 
1,500  to  2,000  miles.  It  was  built  of  stone  and  was,  in 
some  parts  at  least,  covered  with  a  bituminous  cement, 
which  time  had  made  harder  than  the  stone  itself.  All 
the  difficulties  which  a  mountainous  country  presents  to 
the  construction  of  roads  were  here  overcome.  Suspen- 
sion bridges  led  over  mountain  torrents,  stairways  cut  in 
the  rock  made  possible  the  climbing  of  steep  precipices, 
and  mounds  of  solid  masonry  facilitated  the  crossing  of 
ravines.  Under  the  rule  of  the  Spaniards  the  roads  of  the 
Incas  went  to  ruin.  In  fact,  throughout  South  America 
but  little,  if  anything,  was  done  by  the  mother  country 
to  aid  transportation. 

North  America,  or  at  least  that  part  of  it  which  was 
settled  by  the  Anglo-Saxon  race,  fared  much  better  in 
this  respect.  (The  great  utility  of  good  roads  was  univer- 
sally  recognized  even   in    the    colonial   times,    but   the 


Ilistorij   '>/'   Transportation .  37 


scarcity  of  capital,  the  great  extent  of  territory  as  com- 
pared with  the  population,  and  the  want  of  harmonious 
action  among  the  various  colonies,  delayed  extensive  road 
and  canal  building  until  after  the  establishment  of  the 
Union.  Mistaken  local  interests  but  too  often  wrecked 
well-advanced  plans,  and  what  road-building  was  done  dur- 
ing the  colonial  times  was  almost  efttirely  left  to  individ- 
ual exertion,  without  any  direct  aid  from  the  government. 

The  first  American  turnpike  was  built  in  Pennsylvania 
in  1790.  From  there  the  system  extended  into  New 
York  and  Southern  New  England.  Up  to  1822  more  than 
six  million  dollars  had  been  expended  in  Pennsylvauia  for 
turnpikes,  one-third  of  which  sum,  or  over  $1,000  a  mile, 
had  been  contributed  by  the  commonwealth. 

In  1800  three  wagon-roads  connected  the  xltlantic 
coast  with  the  country  west  of  the  x\lleghanies,  one 
leading  from  Philadelphia  to  Pittsburg,  one  from  the 
Potomac  to  the  Monongahela,  and  a  third  passed  through 
Virginia  to  Knoxville,  in  Tennessee.  Much  as  was  done 
during  this  period  for  the  improvement  of  the  roads, 
stage-coach  travel  remained  for  j^ears  comparatively  slow. 
In  1792  Mr.  Jefferson,  then  Secretary  of  State,  wrote  to 
the  Postmaster-Greneral  to  know  if  the  post,  which  was 
then  carried  at  the  rate  of  fifty  miles  a  day,  could  not  be 
expedited  to  one  hundred.  Even  this  latter  rate  was 
considered  slow  on  the  great  post-roads  forty  years  later. 
In  the  year  1800  one  general  mail-route  was  extended 
from  Maine  to  Georgia,  the  trip  being  made  in  twenty 
days.  From  Philadelphia  a  line  went  to  Lexington  in 
sixteen  and  to  Nashville  in  twenty-two  days.  The  gov- 
ernment of  the  United  States,  appreciating  the  importance, 
for  military  purposes,  of  good  roads  leading  to  the  fron- 
tiers, commenced  the  construction  of  national,  or  military, 


38  The  Railroad  Quest  ion. 

roads.  A  road  was  thus  built  from  Baltimore  through 
Cincinnati  to  St.  Louis,  and  another  from  Bangor  to 
Houlton,  in  Maine.  In  1807  Albert  Gallatin,  Secretary  of 
the  Treasur}',  advocated  the  extensive  construction  of 
pul)lic  roads  and  canals  hy  the  general  government.  Mr. 
Gallatin  took  the  ground  that  the  inconveniences,  com- 
plaints, and  perliaps  dangers,  resulting  from  a  vast 
extent  of  territory  cannot  otherwise  be  radically  removed 
than  by  opening  speedy  and  easy  communications  through 
all  its  parts;  that  good  roads  and  canals  would  shorten 
distances,  facilitate  commercial  and  personal  intercourse, 
and  unite  by  a  still  more  intimate  community  of  interests 
the  most  remote  quarters  of  the  United  States,  and  that 
no  other  single  operation  within  the  power  of  the  govern- 
ment could  more  effectually  tend  to  strengthen  and 
perpetuate  that  union  which  secured  external  indepen- 
dence, domestic  peace  and  internal  liberty.  The 
principal  improvements  recommended  by'  Mr.  Gallatin 
were  the  following: 

1.  Canals  opening  an  inland  navigation  from  Massa- 
chusetts to  North  Carolina. 

2.  Improvement  of  the  navigation  of  the  four  great 
Atlantic  rivers,  including  canals  parallel  to  them. 

3.  Great  inland  navigation  by  canals  from  the  North 
River  to  Lake  Ontario. 

4.  Inland  navigation  from  the  North  River  to  Lake 
Champlain. 

5.  Canal  around  the  Falls  and  Rapids  of  Niagara. 

6.  A  great  turnpike  road  from  Maine  to  Georgia, 
along  the  whole  extent  of  the  Atlantic  sea-coast. 

7.  Four  turnpike  roads  from  the  four  great  Atlantic 
rivers  across  the  mountains  to  the  four  corresponding 
Western  rivers. 


Ilistori/    of   Traii.^pnrfdfidii.  30 

8.  Improvement  of  the  roads  to  Detroit,  St.  Louis  and 
New  Orleans. 

Mr.  Gallatin  also  recommended  that  a  sufficient  number 
of  local  improvements,  consisting  either  of  roads  or  canals, 
be  undertaken  so  as  to  do  substantial  justice  to  all  parts 
of  the  country.  The  expenditure  necessary  for  these 
improvements  was  estimated  at  twenty  million  dollars. 
Local  jealousy  and  State  rights  prejudice  practically 
defeated  this  movement,  the  Cumberland  road,  or  National 
Pike,  being  the  only  result  of  any  importance.  The  fail- 
ure of  the  government  to  provide  the  country  with  ade- 
quate roads  left  the  construction  of  turnpike  roads  to 
private  enterprise,  and  these  roads,  before  the  general 
introduction  of  railroads,  often  yielded  much  profit  to 
capitalists.  Great  as  were  the  conveniences  afforded  by 
the  turnpike,  they  were  entirely  inadequate  for  the 
development  of  the  resources  of  the  interior  of  the  country. 
The  products  of  a  forest  or  a  mine  could  not  be  transport- 
ed upon  them  to  any  great  extent.  The  crossing  of  a 
single  water-shed,  owing  to  the  necessity  for  largely 
increased  motive  power,  would  often  materially  decrease 
the  value  of  the  goods  to  be  transported. 

These  drawbacks  of  land  transportation  directed,  toward 
the  close  of  the  last  century,  the  attention  of  the  people 
of  the  United  States  to  the  necessity  of  providing  for  a 
system  of  canals  that  should  bind  together  the  various 
parts  of  their  extended  country  in  the  interest  of  com- 
merce. General  Washington  was  among  the  first  to  urge 
upon  his  countrymen  the  introduction  of  this  great  high- 
way of  inter-state  traffic,  although  luit  little  was  done  in 
this  direction  until  after  the  War  of  1812.  The  people  of 
New  York  had  from  an  early  period  of  the  settlement  of 
their  State  been  imijressecli^with  the   importance  of  con- 


40  The  RiiiliiKul  Question. 

necting  the  Hudson  with  the  Western  lakes.  In  1768  the 
pro^ancial  legislature  discussed  this  subject,  but  the 
political  agitations  of  the  times  and  the  following 
revolutionary  struggle  arrested  further  proceedings. 
After  the  war  the  project  was  frequently  brought 
before  the  legislature,  but  nothing  was  done  until  1808, 
when  the  assembly  appointed  a  committee  to  investigate 
the  subject  and  to  solicit  the  co(")peration  of  the  general 
government,  if  the  project  should  be  found  practicable. 
The  report  of  the  committee  concerning  the  practicability 
of  the  undertaking  was  in  every  respect  favorable,  and 
in  1810  the  legislature  provided  for  a  survey  of  the  entire 
route  from  the  Hudson  Iliver  to  Lake  Erie.  The  survey 
was  made,  but,  the  expected  aid  from  the  national  gov- 
ernment not  being  forthcoming,  the  matter  rested  until 
after  the  war  with  England.  In  1816  a  new  board  of 
commissioners  was  appointed,  and  the  following  year  an 
act  was  passed  providing  for  a  system  of  internal 
improvements  in  the  State.  On  the  4th  day  of  July  next 
the  excavation  of  the  Erie  Canal  was  commenced,  and  on 
the  26th  of  October,  1825,  the  first  boat  passed  from 
Lake  Erie  to  the  Hudson.  The  canal  was  378  miles  long 
and  four  feet  deep.  It  had  a  width  of  40  feet  at  the 
surface  and  28  feet  on  the  bottom,  and  carried  boats  of 
76  tons  burden.  Owing  to  the  rapid  increase  of  trade,  the 
capacity  of  the  canal  was  found  inadequate  within  ten 
years  after  its  opening,  and  in  1835  measures  were  taken 
to  enlarge  it  to  a  width  of  70  and  56  feet  by  a  depth  of 
seven  feet,  thus  allowing  the  passage  of  boats  of  240  tons. 
The  total  length  of  the  canal  was,  however,  subsequently 
shortened  12^  miles,  making  its  present  length  365|- 
miles.  This  enlargement  was  completed  in  1862,  and 
cost  the   State  over  $7,000,000,    making  the  total  cost 


Histoyy   of   Tniusportatio)) .  41 

of  the  canal  about  $50,000,000.  New  York  has,  inclu- 
sive of  branches,  some  ten  other  canals  in  operation, 
among  them  the  Champlaiu  Canal,  extending  from  the 
head  of  Lake  Champlain  to  its  junction  with  the  Erie 
Canal  at  Waterford ;  the  Oswego  Canal,  from  Lake  Ontario 
at  the  city  of  Oswego  to  the  Erie  Canal  at  Syracuse ;  the 
Black  River  Canal,  from  Rome  to  Lj'on  Falls;  the  Cayuga 
and  Seneca  canals,  extending  from  the  Erie  Canal  to  the 
Seneca  and  Cayuga  lakes.  The  State  has  expended  for 
the  cftnstruction  of  canals  not  less  than  $70,000,000. 

Canal-building  in  the  State  of  Pennsjlvania  commenced 
about  the  time  that  the  original  Erie  Canal  was  completed 
in  New  York.  In  1824  the  legislature  authorized  the 
appointment  of  commissioners  to  explore  canal  routes 
from  Philadelphia  to  Pittsburgh  and  the  West.  A  year 
later  surveys  were  authorized  to  be  made  from  Philadel- 
phia to  Pittsburgh,  from  Allegheny  to  Erie,  from  Phila- 
delphia to  the  northern  boundary  of  the  State,  and  also 
south  to  the  Potomac  River.  The  construction  of  the 
main  lines  of  communication  between  the  east  and  the 
west  and  the  coal  fields  in  the  north  was  soon  commenced. 
Large  loans  were  repeatedly  made,  and  the  work  was 
vigorously  prosecuted.  In  1834  Pennsylvania  had  589 
miles  of  State  canals,  among  them  the  Central  Division 
Canal,  172  miles  long,  and  the  "Western  Division  Canal, 
104  miles  long.  Pul)lic  opinion  strongly  favored  an 
extended  system  of  internal  improvements,  and  it  was 
believed  that  these  water-waj's  would  soon  become  a 
source  of  revenue  to  the  State.  These  expectations  might 
have  l)een  realized  had  the  State  carried  on  enterprises  on 
a  less  extensive  and  more  economical  basis.  In  1840 
the  financial  condition  of  the  State  had  become  such 
that   canal-buildiuff  had  to  l)e  al)audoned.      The     amount 


42  The   Railroad  Question. 


expended  by  the  State  of  Penns^ivania  for  canals,  includ- 
ing the  Columbia  Railroad,  was  about  $40,000,000,  while 
the  difference  between  net  earnings  and  interest  paid  by 
the  State  up  to  that  tune  is  estimated  at  $30,000,000.  In 
1857  and  1858  these  works  were  sold  to  the  Pennsj-lvania 
Railroad  Company  and  the  Sunbur}'  and  Erie  Railway  Com- 
pany for  $11,375,000,  or  about  one-sixth  of  their  cost  to 
the  State. 

In  Ohio  the  legislature  authorized  the  surve}'  of  a  canal 
from  Lake  Erie  to  the  Ohio  River.  In  1825  an  act  was 
passed  providing  for  the  construction  of  the  Ohio  Cana] 
and  a  number  of  feeders.  In  1831  the  canal  was  in 
operation  from  Cleveland  to  Newark,  a  distance  of  176 
miles,  and  the  whole  system  was  finished  in  1833. 

The  State  of  Illinois  completed  in  1848  the  Illinois  and 
Michigan  Canal,  connecting  Chicago  with  La  Salle  on  the 
Illinois  River.  This  canal  is  102  miles  long,  60  feet  wide 
and  six  feet  deep.  The  construction  by  the  general 
government  of  the  Hennepin  Ship  Canal,  connecting  the 
Mississippi  with  Lake  Michigan,  has  long  been  agitated  in 
the  Northwest.  Such  a  canal  would  be  one  of  the  most 
important  channels  of  commerce  in  the  country',  and  it  is 
to  be  hoped  that  this  great  project  will  be  completed  at  no 
distant  day. 

We  have  besides  in  the  United  States  a  large  number  of 
canals  that  were  constructed,  and  are  still  operated,  by 
private  companies,  as  the  Delaware  and  Hudson  in  New 
York  and  Pennsylvania,  the  Schuylkill,  Lehigh  and 
Union  canals  in  Pennsylvania,  the  Morris  Canal  in  New 
Jersey,  the  Chesapeake  and  Ohio  and  Maryland,  etc. 
A  large  number  of  canals,  some  public  and  others  private 
property,  have  since  the  construction  of  railroads  been 
abandoned.      Thus   in   New    York    35G    miles   of  canals, 


Ilistorij   of  Tnnispovtntion  .  43 


costing  $10,235,000;  in  Pennsylvania  477  miles,  costing 
$12,745,000;  in  Ohio  205  miles,  costing  $3,000,000;  in 
Indiana  379  miles,  costing  $6,325,000,  are  no  longer  in 
use.  All  the  canals  that  were  ever  built  in  New  England 
have  likewise  been  abandoned  for  commercial   purposes. 

Nor  was  Canada  slow  in  realizing  the  advantages  which 
a  S3'stem  of  canals  connecting  the  great  lakes  with  the 
Atlantic  Ocean  promised  to  give  her.  The  construction 
of  the  Welland  and  St.  Lawrence  canals  made  it  possible 
for  vessels  to  clear  from  Chicago  direct  for  Liverpool,  and 
this  has  to  a  considerable  extent  diverted  grain  shipments 
to  iNIontrcal,  giving  the  Canadian  dealers  a  decided  advan- 
tage in  this  traffic. 

It  is  a  strange  fact  that,  at  least  in  this  country,  the 
zenith  of  the  canal-building  era  is  found  in  the  decade 
following  the  invention  of  the  steam  railroad.  For  many 
years  it  was  not  believed  that  under  ordinary  circum- 
stances the  iron  horse  could  ever  compete  with  the  canal 
boat  in  rates.  The  most  sagacious  business  men  had 
unlimited  faith  in  the  destiny  of  the  canal  as  a  prime  com- 
mercial factor  and  invested  largely  in  canal  stocks.  To  many 
these  investments  proved  a  disappointment.  The  mar- 
velous improvements  in  locomotives  and  other  rolling 
stock,  the  unprecedented  reductions  in  the  ])rices  of  iron 
and  steel,  and  above  all  the  fact  that  in  our  climate 
canal  carriage  is  unavailal jle  during  fixc  months  of  the  3^ear, 
gave  the  railroads  a  decided  advantage  in  their  competition 
with  canal  transportation.  There  can  be  no  doubt,  how- 
ever, that  the  presence  of  this  competition  was  one  of 
the  chief  causes  of  the  great  reduction  of  railroad  rates 
on  through  routes.  In  this  respect  alone  the  canals  have 
accomplished  a  very  important  mission.  In  the  transpor- 
tation of  many  of  the  raw  products  of  the  soil  and  the 


44  The  Railroad  Question. 

mine  canals  still  compete  successfully  with  the  railroads, 
and  it  is  still  an  open  question  whether  future  inventions 
may  not  enable  them  to  regain  lost  ground  in  the  carriage 
of  other  goods.  It  would  certainly  be  a  short-sighted 
policy  for  our  people  to  discourage  the  construction  of 
new  canals. 

For  the  improvement  of  navigable  rivers,  appropriations 
have  been  made  by  Congress  ever  since  the  establishment 
of  our  national  government,  and  these  appropriations  now 
amount  to  millions  of  dollars  annuall}'.  Since  the  intro- 
duction of  railroads  the  usefulness  of  these  national 
highways  of  commerce  has  ceased  to  depend  upon  the 
tonnage  carried  upon  them,  but  the  influence  which  the}' 
exert  upon  the  cost  of  transportation  is  so  great  that  it  is 
not  likel}'  that  the  policy  of  making  annual  appropriations 
for  the  improvement  of  these  water  ways  will  be  aban- 
doned by  the  American  people  for  many  j'ears  to  come. 

There  has  recently  been  a  strong  agitation  in  some 
portions  of  the  United  States  in  favor  of  extending  gov- 
ernment aid  to  the  Nicaragua  Ship  Canal,  and  there  seem) 
to  be  indeed  many  arguments  in  favor  of  such  a  policy. 
President  Harrison  said  in  his  annual  message  to  Congress 
in  December,  1891 : 

' '  The  annual  report  of  the  Maritime  Canal  Company 
of  Nicaragua  shows  that  much  costly  and  necessary  pre- 
paratory work  has  been  done  during  the  past  year  in  the 
construction  of  shops,  railroad  tracks  and  harbor  piers  and 
breakwaters,  and  that  the  work  of  canal  construction  has 
made  some  progress.  I  deem  it  to  be  a  matter  of  the 
highest  concern  to  the  United  States  that  this  canal,  con- 
necting the  waters  of  the  Atlantic  and  Pacific  oceans,  and 
giving  to  us  a  short  water  communication  between  our 
ports  upon  those  two  great  seas,  should  be  speedily  con- 
structed, and  at  the  smallest  practical  limit  of  cost.  The 
gain  in  freights  to  the  people  and  the  direct  saving  to  the 


History   of   Trmtsportatioii .  45 

government  of  the  United  States  in  tlie  use  of  its  naval 
vessels  would  pay  the  entire  cost  of  the  work  within  a  short 
series  of  years.  The  report  of  the  Secretary  of  the  Navy 
shows  the  saving  in  our  naval  expenditures  which  would 
result.  The  Senator  from  Alabama,  Mr.  Morgan,  in  his 
argument  upon  this  subject  before  the  Senate  of  the  last 
session,  did  not  overestimate  the  importance  of  the  work 
when  he  said  that  '  The  canal  is  the  most  important  sub- 
ject now  connected  with  the  commercial  growth  and  prog- 
ress of  the  United  States. ' " 

And  in  his  message  of  1892  that: 
"  It  is  impossible  to  overestimate  the  value  from  every 
standpointof  this  great  enterprise,  and  I  hope  that  there  will 
be  time,  even  in  Ihis  Congress,  to  give  it  an  impetus  that 
will  insure  the  earl}^  completion  of  the  canal  and  secure 
to  the  United  States  its  proper  relation  to  it  when  com- 
pleted." 

It  is  sincerely  to  be  hoped  tiiat  the  people  of  the  United 
States  can  be  convinced  of  the  advisability  of  extending 
government  aid  to  this  enterprise.  It  must  be  admitted 
that  the  experience  of  our  government  with  the  Pacific 
railroads  has  created  a  strong  prejudice  among  the  masses 
against  such  subsides  as  were  granted  to  those  corporations, 
but  it  is  probable,  with  the  people  on  the  alert,  that  Con- 
gress would  not  again  permit  great  impositions  to  be 
practiced  against  the  government.  When  the  great 
advantages  to  be  derived  by  the  people  of  the  United 
States  from  the  use  of  this  canal  and  the  small  outlay 
required  are  considered,  it  would  seem  to  be  a  wise  policy 
for  our  government  at  once  to  take  such  steps  a-s  are 
necessary  to  secure  the  early  completion  and  the  future 
control  of  this  great  international  highway. 


CHAPTER   II. 

THE    HISTORY   OP   RAILROADS. 

IN  making  inquiry  into  those  inventions  and  improvements 
which  were  the  precursors  of  the  modern  railroad, 
we  meet  early  the  desire  to  render  the  movement  of  wagons 
easier  by  a  smooth  roadway.  Traces  of  this  ma}^  be  found 
even  in  ancient  times.  The  Romans  constructed  tracks 
consisting  of  two  lines  of  cut  stones,  and  in  the  older 
Italian  cities  stone  tracks  ma}'  still  be  seen  in  the  streets, 
corresponding  to  wagon  tracks,  and  evidently  designed 
for  the  purpose  of  rendering  the  movement  of  the  wheels 
easier. 

The  first  rail  tracks  of  which  Ave  JiaA^e  any  knowledge 
were  constructed  at  the  end  of  the  sixteenth  century. 
These  rails,  which  were  made  of  wood,  appear  to  have 
been  an  invention  of  miners  in  the  Hartz  Mountains. 
They  were  the  result  of  pi-essing  necessity,  for,  as  mines 
were  usuall}'  so  situated  that  roads  could  only  with  great 
difficulty  and  expense  have  been  built  to  them,  some 
cheaper  sort  of  communication  with  the  high  road  had  to 
be  contrived. 

After  various  experiments  the  wooden  railway  was 
adopted,  and  the  product  of  the  mine  was  carried  upon 
them  to  the  place  of  shipment  by  means  of  small  cars. 
Queen  Elizabeth  had  miners  brought  into  England,  to 
develop  the  English  mines,  and  through  them  the  rail 
track  was  introduced  into  Great  Britain.  Later  the 
wooden  rail  was  covei^sd  with  an  iron  strap  to  prevent  the 
rapid  wear  of  the  wood,  and  about  the  year  1768  cast-iron 
rails  commenced  to  be  used.    At  the  end  of  the  last  centurv 

46 


Tlie   Ilistori/   <\f  Rat'Irodils.  47 


wheels  '^ere  constructed  with  flanges,  to  prevent  derailing. 
More  attention  was  also  paid  to  the  sul)structure,  wood, 
iron  and  stone  being  used  for  this  purpose.  "Wrought- 
iron  rails  were  patented  in  1820. 

The  first  authentic  account  of  heat  or  steam  engines  is 
found  in  the  "  Pneumatica  "  of  Hero  of  Alexandria,  who 
lived  in  the  second  century  before  Christ.  Hero  describes 
a  number  of  contrivances  by  which  steam  was  utilized  as 
a  source  of  power.  Although  these  contrivances  were  at 
the  time  of  very  little  practical  value,  they  are  interesting 
as  the  protot}T3es  of  the  modern  steam  Engine.  The 
attempts  to  move  wheels  b}^  steam  date  back  to  the  seven- 
teenth century,  when  a  number  of  experiments  were  made, 
but  their  exact  nature  is  not  known,  because  they  were  all 
soon  abandoned,  either  on  account  of  unsuccessful  results 
or  lack  of  means.  At  the  beginning  of  the  eighteenth 
century  Denis  Papin  constructed  a  small  steamboat,  upon 
which  he  sailed  in  1707  on  the  Fulda  River  from  Cassel 
to  Munden,  a  distance  of  about  fifteen  miles. 

The  construction  of  locomotives  engaged  the  attention 
of  ingenious  minds  a  century  and  a  half  ago.  It  is  claimed 
that  Newton  experimented  with  a  steam  motor  in  1G80. 
Dr.  Robinson  described  in  1759,  in  his  "  Mechanical  Phil- 
osopln^,"  a  steam  vehicle.  The  Glasgow  engineer  James 
Watt  devoted  himself  from  1 7G9  to  1785,  with  great  energy, 
to  the  development  of  the  steam  engine,  and  succeeded  in 
inventing  the  system  which  became  the  parent  of  the 
modem  engine.  An  American,  Oliver  Evans,  constructed 
at  the  beginning  of  the  present  century  a  carriage  pro- 
pelled by  steam,  and  exhibited  it,  in  1804,  in  the  streets 
of  Philadelphia,  before  twenty  thousand  spectators. 
While  Evans'  invention  was  never  put  to  any  practical  use, 
he  prophesied  that  the  time  would   come  when  steam  cars 


48  Tlic  Rdih'oad  Question. 

would  be  considered  the  most  perfect  means  of  transpor- 
tation. On  Christmas  eve,  1801,  Richard  Trevithick 
exhibited  at  Camborne,  England,  a  steam  coach,  and  soon 
afterwards'  he  and  his  cousin,  A.  Vivian,  obtained  an 
English  patent  on  a  "  steam  engine  for  propelling  car- 
riages."  Seven  years  later  a  Mr.  Blinkensop,  of  Middleton 
Colliery,  near  Leeds,  constructed  another  locomotive 
engine,  upon  which  he  obtained  a  patent  in  1811.  These 
and  a  number  of  other  inventors  of  steam  engines  vainly 
expended  great  ingenuity  in  attempting  to  overcome  a 
purely  imaginary  difficulty.  They  believed  that  the  ad- 
hesion between  the  face  of  the  wheel  and  the  surface  of 
the  road  was  so  slight  that  a  considerable  portion  of  the 
propelling  power  would  he  lost  by  the  slipping  of  the 
wheels.  It  was  not  until  about  the  year  1813  that  the 
important  fact  was  ascertained  that  the  friction  of  the 
wheels  with  the  rails  was  sufficient  to  propel  the  locomo- 
tive and  even  drag  after  it  a  load  of  considerable  weight. 
On  the  other  hand  these  inventors  failed  to  provide  in  their 
engines  adequate  heating-power  for  the  production  of 
steam.  In  1814  George  Stephenson  commenced  to  apply 
himself  to  the  construction  of  an  improved  locomotive. 
When,  owing  to  his  invention  of  the  tubular  boiler,  he 
saw,  after  fifteen  years  of  arduous  toil,  his  labors  crowned 
with  success,  the  civilized  world  entered  upon  a  new  era 
of  social,  industrial  and  commercial  life.  The  first  line 
upon  which  Stephenson's  invention  was  used  was  the 
Liverpool  and  Manchester  Railway.  In  the  year  1821,  a 
number  of  Liverpool  merchants  formulated  a  plan  for  the 
construction  of  a  tramwaj^  between  their  city  and  Man- 
chester. The  question  of  motive  power  was  left  open  as 
between  horses  and  the  steam  engine,  with  which  Mr. 
Stephenson  was  then  experimenting.    After  much  opposi- 


Tlte   Ill^torij   of  lidil nxiils.  49 

tion  on  the  part  of  Parliament  and  the  public  a  charter 
was  obtained  in  182G.  When  the  construction  of  the  road 
was  nearly  completed,  the  directors  of  the  company,  after 
having  determined  upon  the  use  of  steam  engines,  offered 
a  prize  of  £500  for  the  best  locomotive  engine  to  run  at  a 
public  trial  on  the  Liverpool  and  Manchester  Railway. 
This  proposal  was  announced  in  the  spring  of  1829,  and 
the  trial  took  place  at  Rainhill  on  the  6th  of  October  of 
that  year.  The  competing  "Engines  were  the  Rocket,  con- 
structed by  Mr.  Stephenson;  the  Sanspareil,  by  Hack- 
worth;  the  Perseverance,  by  Burstall,  and  the  Xovelty,  b}' 
Messrs.  Braithwaite  and  Ericsson.  Both  Braithwaite  and 
Ericsson  became  subsequently  residents  of  the  United 
States,  and  the  latter  achieved  immortal  fame  as  the 
inventor  of  the  screw  propeller  and  the  builder  of  the 
Monitor.  The  Rocket  was  the  only  engine  that  performed 
the  complete  journey  proposed,  and  obtained  the  prize_ 
It  is  claimed  by  the  biographers  of  John  Ericsson  that  he 
had  really  built  a  much  faster  locomotive  than  Stephen- 
son, and  that,  although  it  had  to  be  constructed  very 
hastily  and  therefore  broke  down  during-  the  trial,  the 
superiority  of  the  principle  involved  in  it  was  universally 
recognized  by  the  engineers  of  that  time.  The  Stephen- 
son engines  became  the  motive  power  of  the  Liverpool 
and  Manchester  road,  which  was  opened  for  public  traffic 
on  the  16th  of  September,  1830.  This  line  was,  however, 
neither  the  first  pul)lic  railway  nor  even  the  first  steam 
railway.  The  first  railway  or  tramway  act  was  passed  in 
England  in  1758,  and  in  182-4  no  less  than  thirty-three 
private  railway  or  tramwa}'  companies  had  been  chartered. 
In  1824  a  charter  was  granted  by  Parliament  authorizing 
the  construction  of  the  Darlington  and  Stockton  Railway, 
to  be  worked  with  ''men  and  horses,  or  otherwise."     By 


uO  The  Railroad  Question. 

a  subsequent  act  the  company  was  empowered  to  work  its 
railway  with  locomotive  engines.  The  road  was  opened  in 
September,  1825,  and  was  practically  the  first  public 
carrier  of  goods  and  passengers.  The  Monklands  Rail- 
way in  Scotland,  opened  in  1826,  and  several  other  small 
lines  soon  followed  the  example  of  the  Darlington  and 
Stockton  line  and  adopted  steam  traction,  but  the  Liver- 
pool and  Manchester  Railway  was  the  first  to  convince  the 
world  that  a  revolution  in  traveling  had  taken  place. 

The  road  was  from  the  very  first  successful,  its  traffic 
and  income  greatly  exceeding  the  expectations  of  its 
managers.  It  should  also  be  noted  here  that  the  cost  of 
construction  fell  largely  below  the  elaborate  estimates 
made  by  several  distinguished  engineers.  The  companj' 
had  expected  to  earn  about  £10,000  a  year  from  passenger 
traffic,  and  the  very  first  year  the  receipts  from  that 
source  were  £101,829.  The  gross  annual  receipts  from 
freight  had  been  estimated  at  £50,000,  Imt  were  £80,000 
in  1833.  From  the  first  the  stockholders  obtained  a 
dividend  of  eight  per  cent. ,  which  soon  rose  to  nine  and 
to  ten  per  cent-  It  has  since  been  demonstrated  that  the 
revenues  of  new  roads  almost  always  exceed  expectations. 

The  success  of  this  railway  stimulated  railway  enter 
prise  throughout  Europe  and  America.  But  while  rail- 
road projects  created  much  enthusiasm  on  one  side,  thej' 
also  met  with  bitter  opposition  on  the  other.  The  preju- 
dice of  the  short-sighted  and  the  avarice  of  those  whose 
interests  were  threatened  by  a  change  in  the  mode  of 
transportation  used  every  weapon  in  their  power  against 
the  proposed  innovation.  The  arguments  used  were  often 
most  absurd.  It  was  said  that  the  smoke  of  the  engine 
was  injurious  to  both  man  and  l)east,  and  that  the  sparks 
escaping  from  it  would  set  fire  to  the  buildings  along  the 


Tlic  Illstorij  of  Railroads.  51 

line  of  road,  the  cows  would  be  scared  and  would  cease 
to  give  their  milk,  that  horses  would  depreciate  in  value, 
and  that  their  race  would  finally  become  extinct.  Nor 
did  many  of  the  European  governments  favor  the  new 
system  of  transportation.  Some  openly  opposed  it  as 
revolutionary  and  productive  of  infinitely  more  evil  than 
good.  The  Austrian  court  and  statesmen  especially 
looked  upon  the  new  contrivance  with  undisguised  dis- 
trust; and  from  their  point  of  view  this  distrust  was 
perhaps  well  founded.  The  rapid  movement  of  the  iron 
horse  seemed  to  savor  of  dangerous  radicalism,  not  to  say 
revolution.  When  the  Emperor  finally,  in  183(3,  concluded 
to  sign  a  railroad  charter,  he  based  his  action  upon  the. 
dubious  ground  that  ' '  the  thing  cannot  maintain  itself, 
anj'how. "  It  may  be  said  that  the  history  of  the  railroad 
is  a  conspicuous  illustration  of  human  short-sightedness. 
The  Prussian  Postmaster-General  Von  Nagler  opposed 
the  construction  of  a  railroad  between  Berlin  aijd 
Potsdam  upon  the  ground  that  the  passenger  business 
between  those  two  cities  was  not  sufficient  to  keep  even 
the  stage-coach  always  full.  It  never  occurred  to  the 
Postmaster-General,  as  it  does  not  occur  to  many  railroad 
men  of  to-day,  that  new  and  cheaper  means  of  trans- 
portation increase  the  traffic.  Even  so  wise  a  statesman 
as  Thiers  said  when  railroad  construction  was  first  agitated 
in  France :  "  I  do  not  see  how  railroads  can  compete  with 
our  stage-coaches."  M.  Thiers  also  opposed  for  years 
the  building  of  a  railroad  between  Paris  and  Versailles, 
declaring  that  on  account  of  a  railroad  not  one  passenger 
more  would  make  the  journey  between  these  two  places. 
But  railroads  came  whether  monarchical  governments 
liked  them  or  not.  Tlie  success  of  the  Liverpool  and 
Manchester  Railroad  stiniulatod  railroad  buildinu'  in  Euff- 


52  Tlie  Railroad   Question. 

land  to  a  marvelous  extent.  Between  1830  and  1843  no 
less  than  seventj'-one  different  companies  were  organized, 
representing  about  2,100  miles.  During  the  next  fonr 
years  637  more  roads,  with  an  authorized  length  of  9,400 
miles,  were  chartered.  The  construction  of  each  new  road 
required  a  special  act  of  Parliament.  These  earl}'  roads  aver- 
aged only  fifteen  to  thirt}'  miles  in  length.  The  competition 
which  ensued  soon  led  to  the  consolidation  of  roads,  which 
continued  until  now  the  14,000  miles  of  railway  in  Eng- 
land and  Wales  are  practically  owned  by  only  a  dozen 
companies.  The  total  number  of  miles  of  railroad  in 
Great  Britain  and  Ireland  is  at  present  over  20,000. 

The  news  of  the  opening  of  the  first  steam  railway  in 
England  spread  through  Europe  comparatively  slowly. 
There  were  in  those  days  but  few  newspapers  printed  on 
the  continent,  and  these  were  read  very  sparingly.  Rail- 
roa,d  discussions  were  confined  to  merchants  and  manu- 
facturers. Even  after  the  success  of  the  railroad  was 
assured  in  England,  a  large  number  of  people  would  not 
believe  that,  except  between  the  largest  cities,  railroads 
on  the  continent  could  ever  be  profitable.  But  few  rail- 
roads have  ever  been  built  which  with  honest,  efficient 
and  economical  management  would  not  pay  a  fair  rate  of 
interest  on  actual  cost  of  construction.  But  in  spite  of 
this  we  have  to  this  day  a  large  number  of  otherwise 
well-informed  people  who  question  the  financial  success 
of  ever}'  new  railroad  that  is  proposed. 

In  those  days  it  occurred  only  to  the  most  sagacious 
minds  that  with  increased  facilities  commerce  would 
expand.  The  missionaries  of  railroad  enterprise  found  it 
therefore  a  difficult  matter  to  interest  capital  in  their 
projects.  Railroad  committees  were  in  time  formed  in  all 
cities  of  any  importance,  but,   with  capital  cowardly,  as 


The  History  of  liailrodds.  53 

usual,  and  governments  distrustful,  their  task  was  often  a 
thankless  oue.  Kailroad  projects  matured  very  slowly, 
and,  when  matured,  were  often  wrecked  by  jealous  and 
short-sighted  governments.  After  the  formation  of  a 
company  five  and  even  teu  years  would  often  pass  away 
before  a  charter  could  be  secured  and  the  work  of  con- 
struction commenced.  It  is  true,  there  were  some  lauda- 
ble exceptions  to  this  rule.  Thus  the  governments  of 
France  and  Belgium  led  the  people  in  railroad  construc- 
tion; but  upon  the  whole  it  can  be  said  that  the  railroad 
forced  itself  by  its  intrinsic  merit  upon  monarchical  gov- 
ernments. It  soon  became  evident  even  to  the  most 
stupid  of  autocratic  ministries  that  it  was  a  choice 
between  the  new  mode  of  transportation  and  national 
atrophy. 

The  first  German  line  was  built  between  the  cities  of 
Nuremberg  and  Furth  in  1835.  It  was  only  about  four 
miles  long,  but  the  success  of  the  experiment  gave  an 
impetus  to  railroad  building  in  other  parts  of  Germany. 
The  Leipzig  and  Dresden  line  followed  in  1837,  and  the 
Berlin-Potsdam  and  Brunswick-Wolfenbuttel  lines  in 
1838.  At  the  end  of  1840  Germany  had  360  miles  of 
railroad.  In  that  j'ear  Frederick  William  IV.  succeeded 
to  the  throne  of  Prussia  and  inaugurated  a  new  and 
exceedingly  liberal  railroad  policy  in  his  realm.  In  1843 
the  Prussian  government  concluded  to  guarantee  certain 
railroad  companies  a  dividend  of  3^  per  cent,  on  the 
capital  actually  invested.  The  state  also  secured  con- 
siderable influence  in  the  administration  of  the  roads  as 
well  as  in  the  right  to  assume  the  management  of  the 
various  lines  under  certain  conditions.  The  governments 
of  the  states  of  Southern  Germany  now  commenced  to 
build    state   roads,    and   their    example    was,    chiefly  for 


54  The  Rail  road    Qnestion. 

strategic  reasons,  soon  imitated  by  Prussia.  Tlie  system 
has  since  grown  to  over  2G,000  miles,  and  no  less  than 
eighty-seven  per  cent,  of  the  mileage  is  under  state  control. 
In  all  the  states  and  provinces  of  the  empire,  except  Bav- 
aria, the  rates  for  transportation  of  passengers  and  freight 
on  all  lines  are  controlled  absolutely  by  the  government. 

In  Austria,  as  has  already  been  indicated,  the  building 
of  railways  was  greatly  discouraged  by  the  government 
until  1836.  In  that  year  the  Emperor  rather  reluctantly 
granted  Baron  Rothschild  a  charter  for  a  railway  from 
Vienna  into  the  province  of  Galicia.  Another  charter 
was  granted  to  a  Baron  Sina  for  a  line  from  Vienna  to 
Raab  and  Gloggnitz.  The  policy  then  adopted  in  Austria 
guaranteed  to  each  railroad  company  a  monopoly  in  its  own 
district  during  the  period  for  which  the  charter  was 
granted.  Soon  after  the  state  also  commenced  building 
lines,  but  the  growth  of  the  Austrian  sj'stem  was  slow 
until  after  the  war  of  1866.  An  era  of  railroad  specu- 
lation was  then  inaugurated,  which  ended  with  the  crisis 
of  1873.  The  total  length  of  the  railroads  of  Austria- 
Hungary  was  10,700  miles  in  1875.  At  present  that 
monarchy  has  nearly  16,400  miles  of  railway,  8,600  of 
which  are  owned  by  private  companies. 

It  has  been  the  policy  of  Austria  to  reduce  rates,  and 
several  roads,  especially  those  built  in  mountainous 
districts,  have 'a  certain  revenue  guaranteed  to  them  by 
the  government. 

The  zone  system  recently  adopted  in  Hungary  reduced 
both  the  passenger  and  freight  rates  of  the  government 
roads  at  least  one-third,  and  this  reduction  has,  contrary 
to  expectation,  greatly  increased  their  net  revenues. 

In  France  railroad  agitation  commenced  in  1832.  A  few 
short  lines  were  opened,  as  those  from  Paris  to  St.  Germain 


Thf  Hlstiiiij   (if  linU nmdii. 


and  to  Versailles ;  but,  owing  to  the  conservatism  of  French 
capitalists,  but  little  more  was  done  until  the  state  took  the 
matter  in  hand.  Thiers  proposed  a  scheme  by  wliieh  the 
state  was  to  furnish  about  half  the  cost  while  private 
companies  were  to  build  the  lines  and  operate  them.  The 
Western  Railroad,  the  first  line  of  any  great  extent,  was 
opened  in  1837  between  Paris  and  Rouen,  and  the  Eastern 
Railroad  was  opened  two  years  later.  There  were  in  1859 
six  large  companies  operating  their  lines  with  profit,  but, 
to  induce  them  to  build  additional  lines  that  were  needed, 
the  state  guaranteed  the  interest  on  the  capital  required 
to  make  their  improvements.  In  1884  there  were  about 
17,000  miles  of  railroad  in  operation.  To  bring  about  the 
construction  of  another  7,000  miles  of  road,  and  to  thus 
complete  the  railroad  system  of  the  countr}-,  the  govern- 
ment now  guaranteed  each  company-  a  dividend  equal  to  the 
average  of  recent  years,  but  not  to  exceed  seven  per  cent. 
It  is  doubtful  whether  this  system  of  monopoly  has  in  all 
respects  been  favorable  to  the  encouragement  of  enterprise 
in  the  railroad  circles  of  France.  In  granting  charters 
the  state  has,  however,  reserved  valuable  rights  which  at 
a  future  period  it  will  have  an  opportunity'  to  assert  for 
the  public  benefit.  The  railroad  companies  have  generally 
a  lease  for  ninety-nine  years,  and  their  lines  become  the 
property  of  the  state  after  the  expiration  of  that  period. 
To  extinguish  the  bonded  debt  and  stock,  a  sinking  fund 
has  been  created,  from  which  a  certain  portion  of  the 
shares  and  outstanding  bonds  is  annuall}'  paid  off  and 
canceled.  The  government  requires  of  the  companies  the 
free  carriage  of  the  mails  and  the  transportation  of 
military  and  other  employes  at  very  low  rates.  Besides 
this  the  state  IcAies  upon  the  traffic  of  the  railroads  a  duty 
of  ten  per  cent,  of  their  gross  earnings  from  passengers 


56  The  Railroad    Question. 

and  from  all  goods  carried  by  fast  trains.  These  .facts 
are  usually  overlooked  by  our  railroad  men  when  they 
indulge  in  making  comparisons  between  the  railroad  rates 
of  this  country  and  those  of  France.  The  French  Repub- 
lic had  13,400  miles  of  road  in  1875,  and  22, 600  in  1890. 
When  all  of  the  proposed  lines  are  completed,  the  total 
mileage  of  that  country  will  be  over  25,000. 

Belgium  has  the  best-developed  track  system  on  the 
continent.  The  state  commenced  the  construction  of  rail- 
roads as  early  as  1834,  and  the  first  line  (Brussels  Maliues) 
was  opened  May  5th,  1835.  Four  great  state  lines  were 
constructed  in  different  directions,  and  between  these 
lines  private  roads  were  permitted  to  be  built.  Between 
1850  and  1870  the  private  lines  increased  from  200  to 
1,400  miles,  and  competition  between  them  and  the  state 
lines  became  so  active  as  to  reduce  rates  to  the  lowest 
possible  point.  In  1870  -the  government  decided  to  buy  a 
large  number  of  competing  lines.  In  1874  it  had  acquired 
more  than  half,  and  at  present,  with  a  few  exceptions,  they 
are  all  owned  and  controlled  by  the  state.  The  exceptions 
to  this  arc  a  few  short  lines  that  were  built  in  the  early  days 
of  railroad  construction.  The  total  mileage  is  now  3,210. 
Rates  have,  however,  not  been  increased  since  this  con- 
solidation, and  they  are  still  lower  than  any  other  country 
in  Europe.  The  transportation  of  mails  is  free,  and 
troops,  military  materials  and  prison  vans  are  carried  at 
reduced  rates. 

Railroads  were  originally  built  in  Switzerland  merely 
for  the  accommodation  of  tourists  and  the  local  traffic. 
The  first  line,  between  Zurich  and  Aarau,  was  completed 
in  1847,  but  general  railroad  enterprise  did  not  develop 
until  after  18G0'.  The  St.  Gothard  route  was  then  pro- 
jected, which  opened  a  direct  through  line  between  Italy 


The  Histuvy  of  Railroads.  57 

and  Germany.  The  roads  are  all  owned  by  private  com- 
panies, but  are  under  strict  government  control.  Great 
publicity  of  their  affairs  is  required.  The  total  mileage 
of  Switzerland  was  2,043  in*  1891. 

In  Italy  railroad  enterprises  have  received  attention 
since  1853.  The  first  roads  were  those  of  Lombard}-, 
being  commenced  while  that  province  was  still  under 
Austrian  rule.  The  treaties  of  Zurich  in  1859  and  of 
Vienna  in  1866  delivered  these  roads  and  the  Venetian 
lines  to  the  kingdom  of  Italy.  Between  1860  and  1870 
the  systematic  construction  of  a  railroad  net  was  com- 
menced which,  connected  the  various  lines  with  each 
other  and  with  Rome.  Nearly  all  the  railroads  of  Italy 
fell  into  the  hands  of  the  government,  but  in  1835  they 
were  leased  for  a  term  of  sixty  years  to  three  conlpanies, 
terminable  at  the  end  of  twenty  or  forty  years  by  either 
party  upon  two  years'  notice.  Under  the  lease  the  state  re- 
ceived two  per  cent,  of  the  gross  receipts.  The  tariffs  are 
fixed  by  the  state,  are  uniform  and  can  be  reduced  by  the 
state.  A  Council  of  Tariffs,  composed  of  delegates  for 
the  government,  for  agriculture,  commerce  and  industry, 
and  for  the  railroad  companies,  all  elected  by  their  own 
boards,  has  been  instituted  to  study  the  wants  and  best 
interests  of  the  country.  The  total  number  of  miles  of 
railroad  in  Italy  was  8,110  in  1889. 

The  first  road  in  Spain  was  opened  in  1848  between 
Barcelona  and  Mataro.  The  government  greatly 
encouraged  railroad  construction  by  subsidies,  and 
during  the  decade  following  1855  the  development 
of  the  railway  system  of  the  country  was  rapid. 
More  than  thirty  companies  have  been  formed,  which 
have  built  about  twenty  main  lines,  aggregating  6,200 
miles. 


58  The   Ruifrodd    Question. 

In  Portugal  very  little  railroad  building  was  done  pre- 
vious to  1863,  when  a  little  over  three  hundred  miles  of 
road  was  constructed.  The  government  owns  nearly 
half  of  the  roads  of  the  c5untry,  the  remaining  lines 
being  the  property  of  private  companies.  The  total 
number  of  miles  operated  in  the  kingdom  in  1885  was 
1,280.  The  service  and  the  financial  condition  of  the 
roads  of  Portugal  are  far  from  being  satisfactory. 

In  Denmark  the  first  railroad  was  built  on  the  island  of 
Seeland  in  1847.  Previous  to  1880  the  larger  part  of  the 
roads  of  the  kingdom  was  owned  by  private  companies. 
Since  then  seA^eral  of  the  most  important  private  roads 
have  ])een  purchased  by  the  state,  which  in  1889  owned 
963  miles,  while  only  251  miles  remained  in  private  con- 
trol. Onl}'  about  thirty  miles  more  have  since  jbeen  con- 
structed. The  roads  are  well  managed,  but  their  net 
earnings  are  less  than  two  per  cent,  of  the  capital 
invested. 

On  the  Scandinavian  Peninsula  the  railroad  sj'stem  has 
developed  rather  slowly.  Norway  built  the  first  line  from 
Christiana  to  Eidsvold  in  1854,  and  Sweden  commenced 
railroad  building  two  years  later.  The  narrow-gauge 
system  is  fully  developed  here.  While  in  Norway  the 
greater  part  of  the  lines  is  owned  by  the  state,  the  roads 
of  Sweden  are  chiefly  in  the  hands  of  private  companies 
which  on  an  average  control  but  little  more  than  twenty- 
five  miles  each.  The  total  mileage  of  Sweden  is  5,970, 
and  that  of  Norway  970. 

The  first  line  of  railroad  in  the  Russian  Empire  was 
constructed  from  St.  Petersburg,  sixteen  miles,  to 
Tsarskoji-Sielo,  in  1842.  The  St.  Petersburg  and  Mos- 
cow line  was  opened  in  1851.  Railroad  building  then 
stagnated  until   after  the   Crimean  War,   when   a   large 


The   Ilistori/   of  R<ii/ro(i(/s.  59 

number  of  lines  were  constructed  at  once.  The  roads 
were  surveyed  by  the  government,  but  constructed  and 
operated  by  private  companies. 

State  aid  was,  however,  freely  given.  During  the  past 
ten  years  the  Kussian  government  has  directed  its  atten- 
tion to  the  development  of  the  railroad  system  in  its  Asi- 
atic possessions.  A  railway  between  the  Black  and  Cas- 
pian seas  was  completed  in  1883,  and  the  Siberian  rail- 
road is  extended  as  fast  as  the  financial  condition  of  the 
empire  permits.  There  are  now  about  20,000  miles  of 
road  in  the  Russian  p]mpire  operated  by  private  compa- 
nies. The  construction  of  a  large  number  of  the  Russian 
railways  was  dictated  by  military  rather  than  commercial 
considerations.  Maximum  rates  are  specified  in  charter, 
and  every  change  of  rates  must  be  approved  by  the  Min- 
ister of  Finance. 

In  the  Balkan  Peninsula  railroad  facilities  are  still  ill 
provided  for.  A  few  lines  have  been  built,  but  these  are, 
as  a  rule,  badly  managed.  Trains  are  slow,  and  rates 
often  so  high  as  to  be  prohibitory.  Roumania  has 
undoul)tedly  the  best  railroad  system  of  any  of  the  Bal- 
kan states,  the  government  controlling  1,000  miles  of 
road.  Greece  is  also  making  some  progress  and  has  at 
the  present  time  010  miles  of  railway.  There  is  reason 
to  lielieve  that  through  communication  will  soon  be  estab- 
lished in  these  countries  on  a  larger  scale. 

The  introduction  of  the  railway  into  Asia  has  been, 
except  in  the  Russian  and  English  possessions,  a  very  diffi- 
cult task.  The  conservatism  or  ignorance  of  the  govern- 
ments and  the  superstition  of  the  people  combined  to 
throw  numberless  obstacles  before  those  who  proposed  to 
pave  the  way  for  the  iron  horse.  British  India  opened 
her  first  railway  for  pulilic  traffic  between  Bombay  and 


60  The   Railroad    Qursfi'on. 

Tannah  on  November  18,  1852.  In  1855  she  had  841 
miles  of  road,  which  increased  to  6,515  miles  in  1875 
and  to  15,828  miles  in  1889,  of  which  8,423  miles  were 
owned  and  operated  by  the  state.  The  total  cost  of 
these  roads  was  $880,000,000. 

In  Asiatic  Turkey  the  first  line  was  opened  between 
Smyrna  and  Trianda  on  the  24th  day  of  December,  1860. 
This  line  was  in  1866  extended  to  Aiden,  and  in  1882  to 
Sarakio.  There  are  at  present  five  lines  with  a  total 
extent  of  446  miles,  all  owned  by  English  companies. 
New  lines,  covering  in  all  3,952  miles,  have  recently 
been  projected. 

The  first  line  in  Persia,  only  seven  miles  long,  and 
extending  from  Teheran  to  Schah-Abdal-Azzim,  was 
opened  on  the  25th  day  of  June,  1888.  Another  line, 
from  the  Caspian  Sea  to  Amol,  is  now  in  process  of 
construction.  A  line  was  opened  last  September  between 
Joppa  and  Jerusalem.     It  is  53  miles  in  length. 

Japan  may  be  said  to  be  already  thoroughly  familiar 
with  the  European  system.  The  first  and  principal  line 
was  opened  on  the  island  of  Napon,  between  Tokio  and 
Yokohama,  on  the  14th  of  October,  1872.  Two  other 
short  lines  followed  in  1874  and  1876,  when  the  total 
extent  of  the  Japanese  roads  was  about  135  miles.  In 
1883  the  construction  of  the  Grand  Trunk  Railroad,  from 
Tokio  to  Kioto,  was  commenced,  which  line  has  been  in 
operation  for  the  past  five  years.  Other  lines,  aggregating 
over  400  miles,  will  soon  be  opened  for  traffic.  The 
total  extent  of  road  in  operation  in  1888  was  580  miles, 
310  of  which  were  controlled  by  the  state,  and  the 
remainder  by  private  companies.  In  1890  the  total 
number  of  miles  exceeded  900.  The  total  average  cost 
per  mile  was  $58,000. 


The   Ilistori/   of  Railroads.  Gl 

No  nation  has  probably  opposed  the  introduction  of  the 
railway  as  stubbornly  as  the  Chinese.  The  first  railroad, 
scarcely  seven  miles  h^ug,  was  built  liy  an  English  company 
near  Kaiping  to  facilitate  the  transportation  of  coal  from 
the  mines  in  that  vicinity.  In  1886  a  Chinese  company 
purchased  this  line  and  has  since  extended  it  to  Tientsin, 
making  its  present  length  about  eighty-four  miles.  The 
Chinese  government  has  recently  authorized  the  further 
extension  of  this  line  to  Yangcliou,aplace  but  a  few  miles 
distant  from  Pekin. 

Of  the  Asiatic  islands  Java  has  the  largest  and  oldest 
railroad  system.  On  the  10th  of  August,  1867,  the  first 
line  was  opened  between  Samarang  and  Tangveng.  Other 
coast  lines  have  since  been  constructed,  but  communication 
is  still  sadly  neglected  in  the  interior.  In  1889  there  were 
operated  on  the  island  nearly  800  miles  of  road,  the 
greater  part  being  the  property  of  private  companies. 

A  road  was  opened  upon  the  island  of  Ceylon  between 
Colombo  and  Kandy  in  1867,  to  which  several  branch 
lines  and  extensions  have  since  been  added.  The  total 
system  comprises  at  present  about  180  miles. 

Short  lines  have  also  been  built  in  Burmah  (1889);  in 
the  Malay  Peninsula  (1885),  in  Sumatra  (1876),  and 
in  Cochin  China  (1885).  A  line  from  Bangkok  to 
Bianghsen,  in  Siam,  is  being  projected  at  the  present 
time. 

In  Africa,  if  we  except  its  northern  coast,  the  con- 
struction of  railroads  has  only  kept  pace  with  the  slow 
development  of  the  resources  of  that  continent.  Its 
European  colonies  are  still  ))ut  thinly  inhabited,  and  their 
industrial  and  commercial  life  still  resembles  much  that  of 
the  American  colonies  of  the  seventeenth  century.  There 
can   be    little   doubt,    however,    that    with    the    increas- 


62  T]ir   Railroad    Quest !<»i. 

ing  immigration  the  growing  demand  for  better  trans- 
portation facilities  will  speedil}'  be  met  by  European 
capital. 

The  first  railroad  upon  African  soil  was  built  by  the 
Egyptian  government  from  Alexandria  to  Cairo,  and  from 
there  through  the  desert  to  Suez.  A  part  of  this  line, 
130  miles  long,  was  opened  to  traffic  in  1856,  and  the 
remaining  ninety  miles  the  j'ear  following.  Nothing 
further  was  done  until  after  Ismail  Pasha  ascended  the 
throne,  in  1863.  The  railroad  system  of  Lower  Eg3'pt, 
between  Alexandria  in  the  west,  Cairo  in  the  south,  and 
Ismaila  in  the  east,  was  then  greatl}'  extended  and  the 
service  materially  improved. 

After  the  opening  of  the  Suez  Canal  the  line  through 
the  desert  to  Suez  was  abandoned.  The  railroad  S3'stem 
of  Egypt  comprises  at  present  about  1,250  miles,  all  of 
which  belongs  to  the  government  except  two  short  lines 
which  are  private  property. 

The  beginning  of  the  railroad  system  of  Algiers  dates 
back  to  1860,  when  the  French  government  gave  a  charter 
to  the  Companie  des  Chemins  de  Fer  Algeriens,  authoriz- 
ing it  to  build  a  number  of  lines  connecting  the  principal 
cities  of  the  province  with  the  Mediterranean.  The  line 
from  Algiers  to  Blidah,  thirty-two  miles  long,  was  opened 
on  September  8,  1862.  Further  construction  was  then 
delayed  until  1863,  when  the  charter  of  the  original 
company  was  transferred  to  the  Paris,  Lyons  and  Medit- 
erranean Railroad  Compan3\  The  original  plans  were  then 
in  the  main  carried  out,  until  the  disturbances  caused  by 
the  Franco-Prussian  war  again  put  an  end  to  railroad  enter- 
prises. In  1874  three  new  companies  were  chartered. and 
railroad  building  w^as  resumed.  In  1888  the  Algerian 
railroad  system  comprised  1,350  miles. 


The   riisfonj   of  RatlrnaJs.  03 

The  first  road  in  Tunis  wiis  built  in  1872  from  the 
city  of  Tunis  to  Barclo  and  Goiiletta  by  English  capitalists. 
It  was,  in  1880,  sold  to  an  Italian  company  to  which  the 
Italian  government  for  political  reasons  had  seen  fit  to 
guarantee  certain  dividends.  Other  small  lines  have  since 
been  constructed,  and  more  important  ones  have  been 
prospected.  The  number  of  miles  at  present  in  opera- 
tion is  153. 

The  French  colony  on  the  Senegal  Kiver  has  a  number 
of  short  lines,  of  which  the  first  was  opened  in  July, 
1883.  These  lines  aggregate  at  present  about  200  miles. 
It  is  now  contemplated  to  extend  this  system  to  the  upper 
Niger.  This  would  necessitate  the  construction  of  240 
additional  miles  of  road. 

The  Cape  Colony  has  the  largest  mileage  of  any  of  the 
European  colonies  in  Africa,  the  absence  of  navigable 
rivers  rendering  ra,ilroads  here  more  necessary  than  else- 
where. The  first  line  was  opened  on  the  13th  of  February, 
18G2.  It  then  extended  from  Cape  Town  to  Earste 
River,  but  was  extended  to  Wellington  the  following  year. 
The  number  of  miles  of  road  in  operation  in  1875  was  900, 
and  in  1891  it  had  increased  to  2,007.  All  the  roads  of 
the  colony,  excepting  a  line  of  93  miles  belonging  to  the 
Cape  Copper  Mining  Company,  are  operated  by  the  colo- 
nial'government.  Their  net  revenue  in  1880  was  2.84  per 
cent,  of  the  capital  actually  invested. 

Port  Natal  built  her  first  railroad  in  1800.  It  was 
only  two  miles  long  and  extended  from  the  city  of 
Durban  to  its  liarbor.  Since  then  several  inland  lines,  ag- 
gregating over  four  hundred  miles,  have  been  constructed 
at  a  cost  of  twenty-two  million  dollars.  The  roads  are 
operated  by  the  colonial  government  and  yielded  in  1891  a 
net  revenue  of  4. 4  i)er  cent  on  the  capital  expended. 


64  The   RdiJroad    Qurstw)i. 


Short  lines  have  also  been  built  on  Mauritius  and  Re- 
union, and  there  is  now  every  indication  that  Portuguese 
Africa  and  the  Congo  State  will  be  provided  with  railroad 
facilities  in  the  near  future. 

The  introduction*  of  railroads  into  Australia  dates  back 
to  the  sixth  decade  of  the  present  century.  The  total 
number  of  miles  of  road  reported  in  1889  by  the  several 
colonies  was  8,883.  If  we  estimate  the  population  of  the 
continent  at  3,000,000  for  that  year  it  will  be  seen  that 
Australia  has  more  miles  of  road  per  capita  than  any 
other  grand  division  of  the  globe,  save  North  America. 

New  South  Wales,  the  mother  colony  of  the  Australian 
continent,  opened  its  first  road  on  September  26,  1855, 
between  Sydney  and  Paramalta.  This  road  was  built 
b}^  a  private  company,  but  was  soon  after  its  completion 
purchased  by  the  colonial  government,  and  was  in  1869 
extended  to  Groulbourn.  In  1875  the  colony  had  only 
436  miles  of  road  in  operation.  The  mountains, 
however,  which  separated  the  wide  plains  of  the 
interior  from  the  coast  had  been  surmounted,  and  the 
government  commenced  to  push  the  construction  of 
new  roads  with  great  vigor.  At  the  end  of  the  year 
1886  New  South  Wales  had  no  less  than  1,888  miles 
of  road  in  operation,  for  which  the  colony  had  expend- 
ed $113,000,000.  The  net  revenue  during  that  year  Vas 
2. 9  per  cent,  on  the  capital  invested.  The  total  number 
of  miles  of  railroad  in  this  colony  was  2,247  in  1889. 

Victoria,  the  smallest  of  the  colonies,  has  made  by  far 
the  greatest  progress  in  railroad  building.  The  first  road 
in  the  colou}^,  and,  in  fact,  the  first  road  upon  the  Aus- 
tralian continent,  was  built  in  1854  between  the  city  of 
Melbourne  and  its  port,  a  distance  of  two  and  one-half 
miles.      Within  the   next  five  years  four  other  lines  were 


The   History   of  Rd'droads.  65 

constructed,  connecting  Melbourne  with  Williamston,  St. 
Kilda,  Brighton  and  Echuca,  respectively.  In  1870  there 
were  in  the  colony  275  miles  of  railroad,  which  had  in- 
creased to  1,198  miles  in  1880,  and  to  2,283  miles  in 
1889.  Several  of  the  roads  were  originally  owned  by 
private  companies,  but  all  of  them  were  in  time  acquired 
by  the  colonial  government,  the  last  one  in  1878.  The 
total  capital  invested  in  1887  was  $125,000,000,  which 
yielded  a  net  revenue  of  $5,800,000.  All  lines  are  under 
the  control  of  a  board  so  constituted  as  to  be  entirely  re- 
moved from  political  influence. 

In  South  Australia  a  short  line  was  built  in  1856  from 
the  city  of  Adelaide  to  Port  Adelaide.  Another  line  was 
constructed  in  1857  from  Adelaide  to  Salisbury,  which 
three  years  later  was  extended  to  Kapunda.  The  colony 
had  then  forty  miles  of  road.  The  increase  during  the 
next  decade  was  only  ninety-three  miles.  Since  then  the 
development  has  been  much  more  rapid,  the  whole  system 
of  railroads  comprising  1,752  miles  in  1889.  All  the 
roads  save  a  few  suburban  lines  are  owned  and  operated 
by  the  colony.  Their  total  cost  is  not  far  from  $60,000,- 
000,  and  their  net  annual  revenue  is  about  two  and  one- 
half  per  cent,  of  the  capital  invested. 

The  colony  of  Queensland  has  only  a  system  of  narrow- 
gauge  roads,  with  the  construction  of  which  it  commenced 
in  1865.  Up  to  September,  1887,  the  colonial  govern- 
ment had  constructed  1 ,  641  miles  of  road  at  a  total  cost 
of  $47,700,000.  The  total  number  of  miles  has  since 
been  increased  to  2,058.  The  net  revenue  of  the  roads 
was  a  little  over  one  million  dollars  in  1886. 

The  transportation  facilities  of  West  Australia  are  still 
far  behind  those  of  her  sister  colonies.  The  first  line  was 
opened  in  1873,  and  the   total  number  of  miles  of  road 


66  Tho  Railroad  Questi'oii. 

operated  in  'the  colony  in  1889  was  onl}'  496.  Tlie  gov- 
ernment controls  nearly  all  the  railroads  of  the  colonj^ 

Of  the  islands  of  Australasia,  Tasmania  and  New 
Zealand  are  as  3'et  the  only  ones  that  have  railroad  com- 
munication. The  former  l)uilt  its  first  road  in  1870  and 
had  at  the  end  of  the  year  1890  about  1,900  miles  in 
operation.  New  Zealand  opened  its  first  railroad  between 
Christchurch  and  Lyttleton  on  December  1,  1863.  The 
development  of  the  system  was  slow  at  first,  there  be^ng 
but  25  miles  of  road  in  operation  in  1870.  In  1891  the 
number  of  miles  of  road  had  increased  to  1,916,  all  but  92 
miles  being  operated  by  the  colonial  government.  The 
total  amount  expended  by  the  government  for  railroads  is 
$55,000,000.  The  net  revenue  in  1887  was  about  2^  per 
cent  of  the  amount  invested. 

In  South  America  railroad  building  is  of  comparatively 
recent  date.  The  first  road  was  built  in  1851,  but  the 
line  was  short  and  remained  the  only  one  for  several 
years.  With  thirty  million  people  the  South  American 
states  have  at  present  but  little  more  than  16,000  miles 
of  railroad,  a  condition  which  must  at  least  in  part  be 
ascribed  to  the  peculiar  conservatism  of  the  Latin  race. 

The  United  States  of  Colombia  possesses  less  than  250 
miles  of  road.  Its  first  line  was  the  Panama  Railroad, 
from  Colon  to  Aspiuwall.  It  connects  the  Pacific  with 
the  Atlantic  ocean,  is  48  miles  long  and  was  constructed 
in  1855.  This,  as  well  as  the  several  other  roads  of  Col- 
ombia,- is  the  propert}'  of  private  companies.  A  number 
of  new  roads  have  recently  been  surveyed. 

Venezuela  opened  in  1866  a  road,  56  miles  long,  from 
Puerto  Caballo  to  Palito,  which  in  1870  was  extended  to 
Aroa.  A  number  of  other  short  roads,  aggregating 
al)Out  350  miles,  have  since  been  constructed.      The  total 


The   History   of  Railroaih.  67 

extent  of  railroad  in  Venezuela  was  432  miles  in  1880,  of 
which  the  greater  part  was  operated  by  private  companies, 
Several  important  lines  are  in  the  process  of  construction, 
and  will  connect  Caracas  with  Carabobo,  8an  Carlos  and 
the  port  of  La  Guayra. 

The  Republic  of  Ecuador  constructed  in  187G  a  road 
from  Jaguachi  to  Puente  de  Chimbo,  a  distance  of  43 
miles.  This  line  was  recently  extended  to  Siambe,  and 
has  now  a  total  length  of  94  miles.  In  1886  a  charter 
was  granted  to  a  North  American  compan}",  authorizing 
the  construction  of  a  road  from  San  Lorenzo  to  Esmeral- 
das  and  guaranteeing  certain  dividends  on  the  investment. 
At  the  close  of  the  year  1889  Ecuador  had  167  miles  of 
road. 

The  first  railroad  in  Peru  was  built  in  1851,  connecting 
the  seaport  Callao  with  the  capita),  Lima.  After  this  but 
little  was  done  for  more  than  twenty  years.  At  the 
beginning  of  the  seventies  an  extensive  railroad  system 
wasi  projected  at  the  instigation  of  President  Don  Manuel 
Pardo,  and  the  construction  of  the  principal  road  of  the 
system  from  JMollendo  on  the  Pacific  Ocean  to  Santa  Rosa 
was  at  once  entered  upon.  This  road  ascends  the  Western 
Cordillera,  crosses  a  number  of  prodigious  mountain 
passes,  reaches  Lake  Titicaca,  and  then  proceeds  in  a 
northwesterly  direction  to  Santa  Rosa.  It  is  over  300 
miles  long,  and  reaches  near  Puna  an  altitude  of  14,700 
feet.  An  extension  of  this  line  from  Santa  Rosa  to  the 
old  Inca  cit}^  Cuzco  was  opened  in  1875,  but  was  subse- 
quently destro3'ed  in  the  war  with  Chile,  and  has  not  been 
reopened.  Another  road,  extending  from  Callao  to  San 
Mateo,  was  opened  in  1876.  It  is  eighty-seven  miles  long, 
and  reaches  with  its  enormous  grades  a  height  of  over 
13,000  feet.    It  belongs,  with  tlie  Santa  Rosa  road,  to  the 


68  Tlie  Railroad  Quesfnon. 

boldest  creations  of  railroad  engineering.  Since  the  war 
with  Chile  railroad  enterprise  has  been  checked.  The 
number  of  miles  of  road  in  operation  rose  from  902  in 
1875  to  1,615  in  .1880,  but  was,  owing  to  the  abandon- 
ment of  certain  lines,  diminished  to  813  in  1884.  Since 
that  time  about  400  miles  of  new  road  have  been 
opened. 

In  the  Republic  of  Bolivia  the  first  railroad  was  built 
about  twenty  years  ago  from  Antofogasta  to  Solar.  After 
the  cession  of  the  province  of  Antofogasta  to  Chile  there 
remained  but  thirty-five  miles  of  road  in  Bolivia.  More 
than  200  miles  have  since  been  added  by  the  construction  of 
several  short  roads,  chiefly  the  property  of  mining  com- 
panies. 

The  Repulilic  of  Chile  was  the  first  of  the  South  Ameri- 
can states  to  initiate  the  construction  of  railways.  The 
building  of  a  line  from  the  seaport  Caldera  to  Copiapo 
was  commenced  in  May,  1850,  and  was  completed  on 
January  2,  1852.  This  line  was  constructed  and  operated 
by  a  private  company.  The  first  state  road,  extendmg 
from  Valparaiso  to  Santiago,  was  opened  on  the  15th  of 
September,  1865.  To  this  road  has  since  been  added  an 
extension  to  Talcahuana,  as  well  as  several  branch  lines. 
The  total  amount  that  has  been  expended  by  the  Chilean 
governmentfor  the  construction  of  railroads  is  $43, 000, 000- 
The ,  total  number  of  miles  of  road  operated  in  Chile  in 
1887  was  1,074,  of  which  992  were  the  property  of 
private  companies  and  682  miles  were  owned  by  the 
state.  Two  hundred  and  fifty  miles  of  road  have  since 
been  constructed,  and  the  construction  of  700  additional 
miles  of  railroad  has  been  authorized  by  the  government. 

The  Argentine  Republic  opened  its  first  road,  extending 
from   Buenos    Ayros    to   Belgrano,  in    December,    1862. 


Tile    Ifisfiiri/   of  Rdilnxrds.  09 

Several  other  lines  soon  followed,  and  in  1870  over  fiOO 
miles  of  road  had  been  constructed.  This  number  had 
increased  to  1,440  in  1880  and  to  5,100  in  1889.  Since 
then  several  new  lines  have  lieen  completed,  aggregating 
over  GOO  miles.  Among  the  principal  lines  of  the  Argen- 
tine Republic  is  the  transcontinental  road  which  connects 
the  Atlantic  w^ith  the  Pacific  Ocean.  The  whole  line  is 
880  miles  long,  of  which  GG5  miles  are  in  the  Argentine 
Republic  and  the  remaining  115  miles  in  Chile.  Of  the 
3,705  miles  of  road  which  were  in  operation  at  the 
beginning  of  the  year  1887  the  republic  owned  1,148, 
the  province  of  Buenos  Ayres  572,  the  province  of 
Santa  Fe  102,  and  private  companies  1,888  miles.  The 
total  amount  invested  in  railroads  was  $154,000,000  in 
1887,  which  jielded  an  average  di\idend  of  3.9  per  cent. 

The  oldest  railroad  in  Brazil  is  the  Petropolis  road.  It 
was  built  by  a  private  company  and  opened  on  December 
IG,  185G.  In  1881  the  total  number  of  miles  in  opera- 
tion was  2,422,  and  in  1889  it  had  inci-eased  to  5,76G. 
Furthermore  charters  had  been  granted  for  the  additional 
construction  of  2,271  miles  of  road.  Of  the  lines  in 
operation  about  1,200  miles  are  the  property  of  the 
state,  yielding  a  revenue  of  nearly  3  per  cent,  on  the 
capital  invested.  The  state  gives  aid,  besides,  to  several 
private  roads.  The  most  important  road  of  Brazil  is  the 
state  road  Dom  Pedro  I.,  which  connects  the  three  richest 
provinces  of  the  country,  Rio  de  Janeiro,  Minas  Gerals 
and  Sao  Paolo,  with  the  national  capital.  It  was  opened 
in  1883,  and  has  a  total  extent  of  544  miles. 

The  principal  roads  of  Uruguay  were  built  between 
18G5  and  1875.  In  the  latter  year  the  total  number  of 
miles  in  operation  in  Uruguay  was  190,  which  in  1880  had 
increased  to  230,  and  in  1889  to  469  miles. 


70  The    Rai/rond   Qnrsfion. 

In  the  remaining  political  divisions  of  South  America 
the  railroad  extended  its  dominion  still  more  slowly. 
Paraguay  opened  as  early  as  1863  a  line  45  miles  long 
from  Asuncion  to  Itangua,  and  in  1892  her  railroad  sys- 
tem had  increased  to  159  miles  in  extent.  British 
Gruiana  completed  in  1866  a  line  from  Georgetown  to  New 
Amsterdam,  but  not  one  mile  of  railroad  has  been  built 
in  that  colony  since.  Of  the  islands  of  South  America 
Trinidad  is  the  only  one  into  which  the  railroad  has  been 
introduced.  The  island  has  at  present  50  miles  of  road, 
to  16  in  1878. 

Central  America  has  less  than  600  miles  of  railway. 
The  causes  which  have  retarded  the  development  of  the 
railroad  sj'stem  in  South  America  are  also  operative  here. 
Of  the  live  republics  of  Central  Anysrica  Costa  Rica  has 
the  largest  number  of  miles  of  railroad,  viz. :  161.  It  has 
three  ditTerent  lines,  of  which  the  Limon  and  Carillo 
line,  seventy  miles  long,  is  the  most  important.  This  road, 
which  connects  with  a  New  York  line  of  steamers  at 
Limon,  has  greatly  furthered  the  cultivation  of  bananas  in 
the  Santa  Clara  valley. 

Nicaragua  completed  its  first  road  in  1880  between 
Corinto  and  Chinandega,  and  has  at  present  about  100 
miles  of  railway  in  operation.  The  Nicaragua  Canal 
Company  is  constructing  a  road  from  Juan  del  Norte  to 
Ochoa,  a  distance  of  thirty-two  miles,  to  be  used  in  tjie 
construction  of  the  canal. 

Honduras  opened  in  1871  its  only  line,  thirty-seven 
miles  long,  between  Puerto  Cabello  and  San  Jago.  In 
recent  years  an  extension  of  nine  miles  has  been  added  to 
it. 

San  Salvador  has,  besides  a  street-car  line  between  the 
cities  of  San  Salvador  and  Santa  Tecla,  only  one  line  of 


The   Ilistoru   of  Rai'lromh.  71 

railroad  between  Acajutla  and  Armea,  which  was  construct- 
ed with  public  funds  and  opened  for  traffic  on  July  15, 
1882. 

Guatemala  was  the  last  of  the  Central  x\mericau  States 
to  introduce  the  railroad.  Its  first  road,  seventj'-four 
miles  long,  and  extending  from  San  Jose  on  the  Pacific 
Ocean  to  the  capital,  Guatemala,  was  built  by  a  San  Fran- 
cisco company  and  opened  on  August  20,  1884.  The 
state  has  at  the  present  time  about  100  miles  of  road, 
with  several  short  but  quite  important  lines  under  con- 
struction. 

The  "West  Indies  have  between  1,200  and  1,400  miles 
of  railway,  of  which  more  than  1,000  are  in  Cuba.  The 
first  road  upon  this  island,  179  miles  long  and  extending 
from  Habana  to  Guanajay,  was  opened  as  early  as  1837. 
The  next  ten  years  developed  almost  the  whole  of  the  rail- 
road system  of  the  western  half  of  Cuba.  A  number  of 
important  roads  have  since  lieen  opened  in  the  central  and 
eastern  portions  of  the  island,  whose  railroad  mileage  is  at 
present  larger  per  capita  than  that  of  any  other  political 
division  of  the  Western  Hemisphere  save  that  of  Canada 
and  the  United  States.  The  second  of  the  ^Yest  India 
islands  to  construct  a  railroad  was  Jamaica.  A  line  con- 
necting Kingston  and  Spanishtown  was  opened  on  the  21st 
of  November,  1845.  Two  branch  lines  have  since  been 
added,  making  the  total  num])er  of  miles  of  road  on  this 
Island  seventy-six  at  the  present  time.  About  twenty-five 
miles  more  are  now  in  the  process  of  construction.  San 
Domingo  and  Hayti  have  also  recently  commenced  to  build 
railroads.  In  the  former  repuljlic  a  line  from  Sanchez  to 
LaVega,  sixtj'-two  and  one-half  miles  long,  is  now  open 
to  traffic,  and  Hayti  is  constructing  a  line  from  Gonaives, 
on  the  western  coast,  to  Porte  de  Paix,  on  the  eastern  coast 


72  The  Railroad  Question. 

of  the  island.  The  Spanish  government  in  1888  also 
granted  a  charter  for  the  construction  of  a  railroad  on  the 
island  of  Porto  Rica. 

Of  our  neighbors  on  the  North  American  continent, 
Mexico  and  Canada,  the  former  has  been  by  far  the 
slower  to  avail  herself  of  the  advantages  of  railroad  com- 
munication. The  slow  growth  of  the  railroad  system  of 
Mexico  must  be  ascribed  chiefly  to  the  frequent  political 
disturbances  of  the  country  as  well  as  to  the  many  topo- 
graphical obstacles  which  presented  themselves  to  the 
railroad  engineer.  The  first  Mexican  railway,  excepting 
tramways,  was  the  one  which  connects  the  capital  with 
the  city  of  Vera  Cruz.  It  was  constructed  by  an  English 
company  and  was  opened  on  the  first  day  of  January,  1873. 
In  1875  the  total  number  of  miles  of  road  in  Mexico  was 
327,  and  five  years  later  somewhat  less  than  700.  Since 
then  the  development  of  the  system  has  been  much  more 
rapid.  In  1880  several  companies  were  formed  for  the 
purpose  of  building  a  system  of  roads  which  would  con- 
nect the  Mexican  capital  with  the  United  States  as  well  as 
with  the  most  important  harbors  of  the  gulfs  of  Mexico  and 
California.  The  projectors  of  these  lines,  who  were  citizens 
of  the  United  States,  received  the  hearty  cooperation  of 
the  Mexican  government,  and  the  work  was  at  once 
pushed  very  vigorously.  At  the  end  of  the  year  1885 
more  than  2,500  miles  of  new  road  were  open  for  traffic, 
and  a  thousand  miles  more  at  the  end  of  the  following 
year.  In  1889  Mexico  had  5,332  miles  of  road.  The 
principal  one  of  the  newly  constructed  roads  is  the  Mexi- 
can Central,  which  connects  Paso  del  Norte  with  the  City 
of  Mexico.  This  line  will  also,  when  its  branches  are 
completed,  form  a  through  route  between  the  Gulf  of 
Mexico  and  the   Pacific  Ocean.       Another  scarcely   less 


The   Iliatorij   of  Railroads.  73 

important  tlirough  line  north  and  south  is  the  National 
Mexican  Railwa}',  which  is  722  miles  long  and  con- 
nects Laredo,  on  the  Rio  Grande,  with  the  capital  and 
the  southern  states.  Another  line  has  recently  been 
opened  from  Torreou  to  Durango.  The  number  of  miles 
of  road  at  present  in  operation  in  the  Repu])lic  of  Mexico 
is  about  G,  800,  with  a  number  of  new  lines  rapidly' nearing 
completion.  The  development  of  Mexico's  resources  has, 
during  the  past  decade,  kept  pace  with  the  rapid  expansion 
of  its  railroad  system. 

In  the  Dominion  of  Canada  about  fifteen  miles  of  rail- 
road line  were  built  as  earl}^  as  1837,  but  only  forty-three 
miles  was  added  during  the  next  ten  years.  In  1852  there 
was  still  only  212  miles  of  railroad  in  all  of  the  British 
possessions  in  North  America.  At  that  time  the  con- 
struction of  the  Grand  Trunk  system  was  commenced, 
the  first  section  of  the  system,  Portland-Montreal,  being 
opened  in  1853.  After  this  railroads  increased  very  rap- 
idly in  Canada,  reaching  an  extent  of  2,087  miles  in 
1860,  4,826  miles  in  1875,  6,891  miles  in  1880,  and  10, 
150  miles  in  1890.  The  majority  of  Canadian  railroads 
are  in  the  hands  of  private  companies,  some  of  which 
have  been  very  materially  aided  bv  the  government.  One 
of  the  conditions  upon  which  the  union  of  the  several 
British  provinces,  except  Newfoundland  and  Prince  Edward 
Island,  was  effected  in  1867,  was  the  construction  of  a 
railroad  by  the  Dominion  government  connecting  the 
provinces  of  Ontario,  Quebec,  Nova  Scotia  and  New 
Brunswick.  This  road,  the  main  line  of  which  extends 
from  Point  Levis,  opposite  Quebec,  to  Halifax,  was 
accordingly  built,  and  is  still  operated  by  the  Canadian 
government.      Its  cost  was  about  46,000,000. 

But  the  most  important  enterprise  in   which   the  gov- 


74  77/f  Railroad  Question. 

ernment  is  interested  is  the  Canadian  Pacific  Railway. 
Like  the  intercolonial  railway,  this  line  was  a  result  of  the 
political  union  of  the  colonies.  Its  construction  was 
commenced  by  the  government,  but  was  subsequently 
assigned  to  a  private  corporation,  the  Canadian  Pacific 
Railway  Company,  all  that  had  lieen  done  b}"^  the  government 
being  turned  over  to  the  company  as  a  gift.  It  is  esti- 
mated that  the  direct  gifts  of  money,  the  land  grant 
and  other  privileges  conferred  by  the  Dominion  govern- 
ment upon  the  Pacific  Railway  Company  exceed  $100,- 
000,000  in  value,  and  that,  with  the  amount  of  bonds 
and  stock  guaranteed  by  the  government,  the  par  value  of 
its  various  aids  amounts  to  $215,000,000,  or  $48,000,- 
000  more  than  the  cost  of  the  road,  as  will  be  shown  by 
the  following  table,  taken  from  the  report  of  the  Inter- 
state Commerce  Committee  of  the  Senate  of  the  Fifty-first 
Congress : 

Subsidy   granted   by   the   act    of    Parliament  of 

February  13,  1881 §25, 000,000 

Seven  hundred  and  fourteen  miles  of  railroad  con- 
structed by  the  Dominion  Government,  origi- 
nal cost  5nd  interest 36,700.78.5 

Capital  stock  guaranteed 65,000.000 

Loan  to  the  company  authorized  by  Parliament  of 

1884,  in  part 29.880.912 

Balance  of  above  loan 1.5,000  000 

Bonds,  interest  giiaranteed  by  the  Dominion  for 

50  years  at  3}2  per  cent 15,000,000 

Land  grant  bonds 25,000,000 

Subsidy  of  8186.000  a  year,  for  20  years 3,720,000 

Total $215,361,697 

Total  cost  of   road,   according  to  the   company's 

balance  sheet  of  December,  1888 $131,350,019 

The  Dominion  Government  owns  and  operates  four  rail- 
ways,   the  cost  of  which  up  to  June  30.  1890,  was  $52,- 


The  nisi  or !i  <>/  R  nil  roads.  75 


800,000.  It  has  also  granted  to  railroad  companies  cash 
subsidies  which  to  June  30,  1889,  amounted  to  over 
$46,000,000.  The  total  number  of  miles  of  railroad  in 
Canada  was  14,004  in  1800.  The  people  of  Canada 
have,  since  the  political  union  of  the  colonies,  pursued  an 
exceedingly  liberal  policy  toward  their  railroads,  but  it 
appears  that  the  great  indulgence  of  the  govQi'nment  only 
bred  license  in  railroad  circles.  The  evil  increased  from 
^•ear  to  year,  until  the  many  complaints  on  the  part  of  the 
public  against  railroad  management  caused  Parliament  in 
1886  to  appoint  a  commission  to  examine  into  the  alleged 
abuses  and  to  report  as  to  the  advisability  of  the  adoption 
of  a  general  railroad  law,  and  the  appointment  of  a  Board 
of  Railroad  Commissioners.  The  committee  reported  to 
the  Governor-General  of  Canada  on  the  14th  of  January, 
1888,  and,  acting  upon  its  recommendation.  Parliament 
passed  the  Railway  Act  of  May  22,  1888.  This  act,  con- 
taining 309  paragraphs,  provides  for  the  complete  regu- 
lation of  railroad  affairs,  and  for  this  purpose  creates  a 
Board  of  Railroad  Commissioners,  consisting  of  the  Minister 
for  Railroads  and  Canals,  the  Minister  of  Justice^ and  two 
or  more  members  of  the  Privy  Council.  The  act  also 
repeals  all  foi'mer  railroad  laws.  Though  it  has  been  in 
force  less  than  five  years,  its  beneficial  effects  are  already 
extensively  felt  by  the  Canadian  public. 


CHAPTEK  III. 

HISTORY  OF  RAILROADS  IN  THE  UNITED  STATES. 

IN  no  country  in  the  world  has  the  growth  of  railroads 
been  so  rapid  as  in  the  United  States.  With  a  pop- 
ulation less  than  one-fifth  as  large  as  that  of  Europe  this 
country  has  a  larger  number  of  miles  of  railroad  than  that 
continent.  While  European  qpuntries  generally  opposed 
the  introduction  of  the  new  system  of  transportation,  our 
people  extended  to  it  a  hearty  welcome.  This  difference 
of  sentiment  can  easil}-  be  accounted  for.  At  the  time  of 
the  invention  of  railroads  Europe  had  a  system  of  turn- 
pikes and  canals  which,  at  least  for  the  time  being, 
answered  every  purpose.  It  became  necessary  for  the 
railroads  to  enter  into  competition  with  these  well-estab- 
lished agencies  of  transportation,  which  had  the  test  of 
time,  popular  prejudice  and  governmental  sanction  in  their 
favor.  ^loreover,  the  railroad  as  a  new  and  unknown 
quantity  caused  a  feeling  of  uneasiness  in  all  conservative 
circles.  It  seemed  to  make  war  against  time-honored 
principles  of  statecraft  and  society,  and  threatened  to 
bring  about  a  revolution  the  outcome  of  which  no  one 
could  foresee. 

The  condition  of  things  was  entirely  different  in  the 
United  States.  There  were  but  few  good  roads  and  still 
fewer  turnpikes  and  canals.  A  vast  territory  in  the 
interior  awaited  cultivation.  Excepting  the  coast  and  a 
few  cities  situated  on  the  large  navigable  rivers,  the  East 
and  the  West  and  the  North  and  the  South  were  practi- 
cally without  commercial  relations,  and  were  only  held  to- 
gether by  a  community  of  political   traditions   and  the 


History  of  Railroadfi  in  the  United  States.  77 

artificial  cement  of  a  common  constitution.  Even  had 
tiie  country  had  a  sj'stem  of  turnpilvcs  and  canals,  the 
Mississippi  River  would  still  have  been  a  fort}^  days',  and 
the  extreme  Northwest  a  three  months'  journey  distant 
from  New  York.  It  seems  extremely  doubtful  whether 
the  different  sections  of  so  large  a  realm,  having  so  little 
community  of  commercial  interests,  could  long  be  kept 
together  under  a  republican  system  of  government.  The 
settlement  of  the  central  portion  of  the  country  and  the 
development  of  its  resources  seemed  to  be  the  task  of 
future  centuries.  The  railroad  under  these  circumstances 
made  its  appearance  at  a  most  opportune  time  for  America, 
and  the  American  people  were  not  slow  to  make  the  best 
of  the  opportunities  presented  to  them. 

In  the  United  States,  as  in  England,  the  railroad  was 
preceded  by  the  tram-road.  The  first  tram-road  in  this 
country  was  opened  in  1826.  It  connected  the  granite 
quarries  of  Quincy  with  the  Neponset  River,  and  was 
operated  by  horse-power.  The  second  road  of  this  kind 
was  the  Mauch  Chunk  tramway,  in  Pennsylvania,  opened 
in  1826,  for  the  transportation  of  coal.  The  trains  were 
drawn  up  an  inclined  plane  by  stationary  engines  and  were 
moved  down  by  their  own  weight.  During  the  same  year 
the  Delaware  and  Hudson  Canal  Company  opened  the  Car- 
bondale  and  Homesdale  tramway,  connecting  their  mines 
with  the  Delaware  and  Hudson  Canal.  It  appears  that  an 
English  locomotive  was  imported  for  use  on  this  line  in 
1828,  but  that  it  did  not  answer  its  purpose. 

During  the  same  year  was  commenced  the  construction 
of  the  first  line  of  importance  in  this  country,  the  Balti- 
more and  Ohio.  The  line  was  opened  for  traffic  in  1830, 
having  then  an  extent  of  fourteen  miles.  In  1831  it  was 
extended  sixty-one  miles,  and   the  year  following  sixty- 


78  The  Railroad   Quest  ion. 

seven  miles.  For  a  year  the  road  was  operated  by  horse- 
power, but  in  1831  tiie  company  purchased  for  its  road  an 
American  locomotive. 

The  first  road  upon  which  a  iocc  motive  engine  of  Amer- 
ican manufacture  was  used  was  the  South  Carolina  Rail- 
road, which  was  commenced  in  1830.  The  engine  was 
manufactured  at  West  Point  and  was  placed  upon  the 
road  in  December  of  the  same  year.  The  line  had  then 
an  extent  of  ten  miles.  In  1832  it  had  increased  to  sixtyr 
two  miles,  and  in  1833  to  13G  miles.  The  construction 
of  the  Mohawk  and  Hudson  was  commenced  in  August, 
1830,  and  the  road  was  opened  in  Septemlier  of  the  fol- 
lowing year.  Its  first  locomotive  engine  was  also 
imported  from  England,  but,  being  found  too  heavy,  was 
soon  replaced  by  an  American  engine  of  half  its  weight. 
In  1831  two  other  New  York  roads  were  commenced,  the 
Saratoga  and  the  New  York  and  Harlem.  A  small  portion 
of  the  latter  was  opened  during  the  same  year,  and  the 
former  in  Jul}^,  1832.  The  Camden  and  Amboy  Railroad  in 
New  Jersey  was  likewise  commenced  in  1831,  but  its 
completion  was  not  reached  till  1834.  The  New  Castle 
and  French  town  Railroad  was  completed  in  1832,  the  Phila- 
delphia and  Trenton  in  1833,  and  the  New  Jersey  in  1834. 
In  1835  th3  Washington  branch  of  the  Baltimore  and  Ohio 
was  opened,  and  the  entire  line  had  at  the  end  of  that  year 
attained  an  extent  of  1 1 5  miles.  During  the  same  year 
three  Massachusetts  roads,  connecting  Boston  with  Provi- 
dence, Worcester  and  Lowell  respectively,  were  opened. 
In  1836  the  New  York  Central  route  was  opened  to  Utica. 
In  1837  the  Richmond,  Fredericksburg  and  Potomac  Rail- 
road was  completed  from  Richmond  to  Fredericksburg. 
In  1838  the  Richmond'and  Petersburg  and  the  Philadelphia, 
Wilmington  and  Baltimore  railroads  were  opened.      The 


Ilistrnni  t,j  Railrinids  in  tli<    Vnilttl  Sfides.  79 

"Wilmiugton  and  "Welclou  Railroad  was  completed  in  1840, 
and  the  Petersburg  and  Roanoke  three  years  later.  There 
was  now  a  continuous  line  of  railway  from  the  Potomac 
to  Wilmiugton,  North  Carolina.  In  1842  the  whole  line 
of  the  Boston  and  Albany  road  was  completed,  which  thus 
became  the  first  important  through  route  in  America. 

The  construction  of  railroads  in  the  United  States  was 
from  the  first  carried  on  without  a  system.  Railroads  in 
an  early  da}'^  were  purel}'  local  affairs.  Each  locality 
operated  its  own  road  in  its  own  interest  and  without  an}' 
supervision  from  the  State  which  had  granted  its  charter. 
Acts  of  incorporation  or  charters  were  granted  as  a  matter 
of  course.  Railroads  were  looked  upon  as  the  natural 
feeders  of  canals,  and  their  future  importance  was  fore- 
seen by  very  few  men.  The  early  roads  were  a  heav}' 
burden  on  the  capital  of  the  country.  A  number  of  small 
roads  were  built  that  proved  unprofitable  and  had  tq  be 
abandoned.  After  the  financial  panic  of  1837  there  was, 
except  in  New  England,  a  very  perceptible  stagnation  in 
railroad  enterprise,  which  lasted  until  the  discovery  of 
gold  in  California,  in  1848.  The  average  number  of 
miles  of  road  constructed  per  annum  during  the  ten  years 
preceding  1848  was  380,  while  it  was  nearly  1,800  per 
annum  during  the  seven  years  following. 

It  may  be  said  that  with  the  discover}'  of  gold  in  the 
West  ends  the  first  or  forijiative  period  of  railroad  con- 
struction. From  the  first  opening  of  the  Baltimore  and 
Ohio  to  the  beginning  of  the  year  1848,  a  period  of  eigh- 
teen years,  there  were  constructed  in  the  United  States 
5,205  miles  of  railroad,  or  an  average  of  289  miles  per 
annum.  The  discovery  of  gold  on  the  Pacific  gave  a  new 
impetus  to  railroad  construction  throughout  the  country. 
Railroads  now  ceased  to  be  local  works  and  became  inter- 


80  The  Railroad    Question. 


state  or  national  thoroughfares.  Extensive  new  lines  were 
built  and  through  routes  were  formed  by  the  coalition  of 
local  roads.  It  was  during  this  period  that  railroad  com- 
panies first  became  conscious  of  the  importance  of  their 
mission  and  that  they  commenced  to  compete  with  river 
and  canal  carriers.  In  1848  a  through  route  was  com- 
pleted between  Cincinnati  and  Lake  Erie.  A  more  direct 
line,  the  Cleveland,  Columbus  and  Cincinnati  road,  was 
opened  in  1851.  During  the  same  year  the  Erie  Railroad 
reached  Lake  Erie  and  connected  the  lake  with  the  Hud- 
son, and  a  year  later  Chicago  received  railroad  connection 
with  the  East  by  the  completion  of  the  Michigan  Central 
and  Michigan  Southern.  In  1854  the  Chicago  and  Rock 
Island  reached  the  Mississippi  River,  and  in  1855  the 
Chicago  and  Galena  was  opened.  One  year  later  the 
Illinois  Central  reached  the  Mississippi  at  Cairo,  and  the 
Chicago,  Burlington  and  Quincy  Railroad  was  opened  to 
Quincy.  The  Ohio  and  Mississippi,  between  Cincinnati  and 
St.  Louis,  was  completed  at  about  the  same  time.  The 
Pittsburgh,  Fort  Wayne  and  Chicago,  an  extension  of  the 
Pennsylvania  road,  was  completed  to  Chicago  in  1858. 
At  the  beginning  of  1859  the  Hannibal  and  St.  Joseph  Rail- 
road reached  the  Missouri  River,  and  eight  years  later  the 
Cedar  Rapids  and  Missouri  was  completed  to  the  Missouri 
at  Council  Bluffs. 

To  encourage  the  extension  of  railroads  into  new  and 
thinly  settled  territories,  and  to  thus  hasten  their  settle- 
ment and  the  development  of  their  resources,  the  people 
of  the  United  States  began  at  the  commencement  of  this 
period  to  favor  the  polic}^  of  land  grants.  Such  grants 
had  repeatedly  been  made  to  roads  and  canals  prior  to  the 
crisis  of  1837.  The  first  railroad  that  received  a  land 
grant  was  the  Illinois  Central.     The  scheme  was  proposed 


Ilislorij  of  lidil rodils  in  the   inltcd  iSfatcs.  81 


as  early  as  1 8BG,  1)ut  the  act  making  the  grant  was  not 
passed 'until  September  20,  185U.  Other  grants  lullowed 
in  1852  in  Missouri,  in  1853  in  Arkansas,  in  185G  in 
Michigan,  Wisconsin,  Iowa,  Florida  and  Louisiana.  As 
a  rule  these  lands  were  granted  by  the  National  Liovern- 
ment  to  the  States,  and  by  them  to  the  railroads.  -  The 
land  grants  made  during  President  Fillmore's  administra- 
tion amounted  to  eight  million,  and  those  made  during 
Pierce's  administration  to  nineteen  million  acres.  The 
financial  crisis  of  1857  and  the  War  of  the  Rebellion  again 
checked  railroad  building,  but  this  period  developed  a 
new  phase  t»f  railroad  enterprise  as  well  as  of  the  land 
grant  policy.  In  those  times  of  national  trial  a  railroad 
to  the  Pacific  Coast  seemed  a  political  necessity.  The 
project  of  connecting  the  Atlantic  and  Pacific  oceans  by  a 
line  of  railroads  was  first  brought  prominently  before  the 
American  people  by  Asa  Whitney  of  New  York.  At  a 
meeting  held  under  his  auspices  in  Philadelphia  on  the 
23d  day  of  December,  1846,  a  movement  was  inaugurated 
for  the  purpose  of  interesting  the  people  in  this  enterprise 
and  securing  the  aid  of  the  government  for  its  accomplish- 
ment. Various  plans  were  urged,  and  earnest  discussions 
followed,  in  which  the  ablest  minds  of  the  nation  partici- 
pated. The  continual  agitation  of  the  subject  finally  led, 
on  the  1st  of  July,  1862,  to  the  passage  by  Congress  of 
an  act  incorporating  the  Union  Pacific  Railway  Company 
and  the  adoption  of  the  central  route.  The  Union  and 
the  Central  Pacific  companies  received  a  virtual  money 
subsidy  of  $30,000,000  and  a  land  grant  aggregating 
nearly  twenty-three  million  acres,  a  domain  almost  equal 
to  the  State  of  Indiana.  Other  direct  grants  of  territorial 
lands  soon  followed.  The  Northern  Pacific  received,  just 
before  the  close  of  the  war,  a  grant  of  fortj'-seven  million 


82  Tlic   Rallrodd  Question. 

acres  of  land.  In  the  Soiathwost  public  lands  were  also 
freely  given  to  new  Pacific  lines.  •  The  various  grants 
made  to  railroads  comprise  no  less  than  300,000  square 
miles,  equal  to  four  and  a  half  times  the  area  of  New 
England,  or  six  times  that  of  the  State  of  New  York,  or 
equal  to  the  total  area  of  Iowa,  Wisconsin,  Illinois,  Indi- 
ana, Michigan  and  Ohio.  Where  these  grants  were  not 
deemed  sufficient  inducement  for  the  construction  of  roads, 
counties,  cities  and  towns  freely  voted  subsidies,  while 
private  citizens  made  donations  to  or  subscribed  for  the 
securities  of  the  new  railroads. 

As  has  already  been  stated,  the  consolidation  of  con- 
necting lines  and  their  transformation  into  a  few  large 
through  routes  was  one  of  the  characteristic  features  of 
this  period.  As  through  traffic,  and  particularly  through 
freight,  grew  in  importance,  it  became  more  and  more 
apparent  that  frequent  transhipment  was  an  expense  to 
the  railroads  as  well  as  a  burden  to  the  public.  The 
system  of  railroad  ownership  and  management  soon 
adapted  itself  to  thie  necessities  of  business.  The  change 
seems  to  have  been  inevitable,  for  it  occurred  in  all  parts 
of  the  world  at  about  the  same  time.  Sagacious  men 
early  recognized  the  importance  of  railroads  as  national 
lines  of  communication.  This  idea  no  doubt  controlled 
the  projectors  of  the  Baltimore  and  Ohio,  of  the  Erie,  and 
of  the  Boston  and  Albany  roads.  The  first  consolidation 
of  any  importance  took  place  in  1853,  when  eleven  differ- 
ent roads  between  Alljany  and  Buffalo  were  united  to 
form  the  New  York  Central.  Five  branch  roads  were 
added  to  the  system  between  1855  and  1858.  In  ISG-t 
Cornelius  Vanderbilt  secured  control  of  the  Hudson  River 
road,  and  in  1867  of  the  New  York  Central,  which  lines 
he  consolidated   in  1869.      By  gaining   soon   afterward 


Uistury  of  Railroads  in  the  United  States.  83 

control  of  the  Lake  Shore  and  Michigan  Central  and 
Southern  Canadian  roads,  he  united  under  one  manage- 
ment over  4,00(1  miles  of  raih'oad  l)etween  New  York  and 
Chicago,  and  tlnis  created  th(^  lirst  Ihrougli  line  l)etween 
the  East  and  tlie  West. 

As  has  ah'cady  been  stated,  tlie  l\Minsylvania  road 
gained  control  of  the  Pittsburgli,  Fort  Wa3'ne  and  Chicago 
in  1858  and  tlins  extended  its  system  as  far  as  Chicago. 
Through  the  absorption  of  other  lines  it  reached  an  extent 
of  over  7,000  miles.  The  creation  of  this  through  route 
was  chiefly  the  work  of  Thomas  A.  Scott,  at  that  time 
vice-president,  and  later  president,  of  the  Penns3dvania 
railroad. 

In  1874  the  Baltimore  and  Ohio,  under  the  management 
of  John  W.  Garrett,  extended  its  system  to  Chicago,  and 
became  a  competitor  of  the  two  older  lines  in  the  trans- 
portation of  through  freiglit.  At  about  the  same  time 
two  other  parallel  trunk  lines  were  developed,  the  Grand 
Trunk  on  the  north,  and  .the  Erie,  between  the  Lake 
Shore  and  Penns3-lvania  lines.  There  were,  therefore,  in 
1874  five  rival  trunk  lines  competing  for  the  business 
between  the  West  and  the  seaboard. 

Dui'ing  the  same  period  large  rival  lines  developed  west 
of  Chicago  and  St.  Louis.  From  the  former  city  radiate 
the  St.  Paul  and  Northwestern  systems,  each  with  from 
6,000  to  8,000  miles;  the  Atchison,  Topeka  and  Santa  Fe 
with  over  9,000  miles;  then  the  Rock  Island,  the  Chicago, 
Burlington  and  Quincy,  tlie  Illinois  Central,  the  Chicago 
and  North- Western,  the  Chicago  and  Alton,  their  systems 
ranging  from  1,000  to  (3,000  miles  in  extent.  From  St. 
Louis  radiate  the  various  branches  of  the  JNIissouri  Pficific 
and  the  closely  allied  Wabash  system,  controlling  together 
some  10,000  miles  of  road. 


84  The  Railroad  Question. 

This  process  of  consolidation  also  went  on  in  the  South- 
ern States,  though  to  a  less  extent.  Their  systems  do  not 
run  parallel,  like  the  trunk  lines,  nor  do  they  radiate  from 
a  common  center,  like  the  roads  of  the  Northwest,  Init 
they  radiate  from  the  principal  ports  of  the  Atlantic  and 
the  Grulf  of  Mexico  toward  the  interior. 

We  now  enter  upon  the  third  period  of  the  history  of 
American  railroads,  the  period  of  combinations.  Daring 
the  time  of  great  activity  in  railroad  construction  follow- 
ing the  War  of  the  Rebellion  many  abuses  in  railroad 
management  had  been  developed,  which  caused  general 
complaint  and  led  to  what  is  known  as  the  Granger  move- 
ment. Laws  were  demanded,  especiallj'  in  the  agricul- 
tural States  of  the  West,  which  should  regulate  the  rates, 
methods  of  operation,  and  the  political  relations  of  the 
railroads.  The  friends  of  this  movement  were  successful 
in  the  political  contests  that  followed,  and  Granger  legis- 
latures were  elected  in  the  States  of  Illinois,  Wisconsin, 
Iowa  and  Minnesota.  Laws,  were  passed  fixing  the  rates 
on  different  classes  of  roads  and  providing  penalties  for 
their  violation.  The  companies  contested  these  acts  in 
the  courts,  but  were  defeated  at  every  step,  until  in  1877 
the  Supreme  Court  of  the  United  States  sustained  the 
constitutionality  of  the  Granger  laws.  In  the  meantime 
railroad  managei's  tried  their  utmost  to  render,  b}^  shrewd 
manipulation,  these  laws  obnoxious,  and  they  finally  suc- 
ceeded in  having  them  repealed  or  so  amended  as  to  render 
them  largely  ineffectual. 

It jvasjthe  principal  object  of  the  Granger  movement  to 
do  away  with  the  many  discriminating  tariff's  which  so 
injuriously  affected  local  points.  It  is  true,  discrimina- 
tions between  individuals  were  practiced  at  business  cen- 
ters, but  rates  upon  the  whole  were  low  at  such  points  as 


Ilisttini  v/'  R^ii/nxufs  ill  tlir   liiilril  iSfdfcs.  <S5 

compared  with  those'  which  obtained  at  local  stations. 
While  the  Granger  contest  was  still  going  on  in  the  West, 
a  new  evil  developed  in  the  East,  which  became  character- 
istic of  the  period  and  finally  grew  into  one  of  the  most 
intolerable  abuses  of  railroad  management.  Railroad 
men  had  gradually  learned  that  it  was  in  their  power  to 
maintain  high  rates  at  competitive  as  well  as  at  non-com- 
p^itive  points,  provided  all  the  roads  centering  at  such 
points  conld  be  induced  to  cooperate,  or  rather  to  con- 
spire for  that  purpose.  The  final  solution  of  the  problem 
was,  after  some  experimentation,  found  in  the  device  to 
control  the  prices  of  transportation  generally'  known  as 
the  pool.  It  is  doul)tful  whether  an}^  contrivance  con- 
nected with  railroad  management  ever  threatened  to  sub- 
vert long-established  principles  of  the  common  law  more 
completely  than  this.  Within  a  few  years  it  extended 
its  dominion  over  the  whole  country,  exacting  a  heavy 
tribute  from  its  commerce,  until  the  people's  patience 
finally  became  exhausted  and  their  determined  demand 
for  railroad  reform  led  to  the  enactment  of  the  Interstate 
Commerce  Act  in  1887. 

When  this  act  passed,  dire  results  were  predicted  by 
nearly  every  railroad  man  in  the  country  Prophecies 
were  freely  made  that  it  would  ruin  half  of  the  roads  and 
seriously  cripple  and  sadly  interfere  with  the  usefulness 
of  the  other  half,  that  it  would  derange  the  business  of 
the  country,  greatly  depreciate  all  railroad  securities  and 
put  an  end  to  railrgad  construction.  Nearly  seven  years 
have  passed  since  the  adoption  of  the  law,  but  not  one  of 
these  prophecies  has  come  to  pass.  There  are  at  present 
probably  less  bankrupt  roads  in  the  United  States  than 
there  have  been  at  any  time  for  twenty  years,  our  busi^ 
ness  interests  have  been  improved,  the  securities  of  lion- 


86  Thf   Rail  road    Qurstini}. 

estl}"  managed  roads  are  in  better  repute  than  they  were 
previous  to  the  passage  of  the  law,  and  the  raih'oad  mile- 
age of  the  country  is  increasing  at  the  rate  of  about  6,000 
miles  a  year.  If  any  branch  of  business  has  suffered  in 
consequence  of  the  enactment  of  the  law,  it  is  the  branch 
monopolized  by  Wall  Street.  Since  1885,  the  time  when 
the  Interstate  Commerce  Bill  was  first  seriously  agitated, 
the  aggregate  of  railroad  securities  has  increased  nearly 
$2,500,000,000,  or  about  one-third.  This  certainly  does 
not  Iqok  as  if  capital  had  been  seriously  frightened 
by  the  Interstate  Commerce  Act.  There  are  other  proofs 
of  railroad  prosperity.  In  1885  the  gross  earnings  of  the 
railroads  of  the  United  States  were  $772,568,833,  or  9.9 
per  cent,  on  their  reported  capital.  In  1886  their  gross 
earnings  were  $829,940,836,  or  10.2  per  cent,  on  the 
reported  railroad  capital.  In  1890  the  gross  earnings  had 
increased  to  $1,097,847,428,  and  equaled  10.8  per  cent, 
on  the  reported  capital.  This  includes  even  the  capital- 
ization of  new  lines  and  others  not  reporting  operations. 
Mr.  Poor  gives  the  reported  cost  of  the  lines  actuallj' 
operated  as  $8,519,670,421,  against  $10,122,635,900 
reported  cost  of  all  the  railroads  built.  Omitting  from 
the  computation  the  lines  not  reporting  operations,  the 
gross  earnings  of  the  roads  actually  operated  equaled  12.7 
per  cent,  and  their  net  earnings  4  per  cent,  on  the  actual 
cost  of  the  lines  which  reported.  The  gross  earnings  for 
1891  were  $1,138,024,459,  and  for  the  year  ending  June 
30,  1892,   $1,222,711,698. 

The  gross  earnings  per  mile  have  increased  from  $6,265 
in  1885,  and  $6,570  in  1886,  to  $6,946  in  1890,  and $7, 409 
in  1892.  In  1885  the  capitalization  per  mile  of  road  was 
$55,059  and  the  net  earnings  per  mile  were  $2,185.  In 
1890  the  capitalization  per  mile  liad  decreased  to  $53, 783, 


Ifistiir}/  of  R<i!Ir<i<t(U  in  fhr   Uiilti<l  S/afrs.  87 

while  the  net  earnings  per  mile  increased  to  $2,195.  The 
railroad  mileage  of  the  country  has  grown  from  128,361 
in  1885  to  16(5,817  in  1890,  to  170,001  in  1891,  and  to 
175,000  in  1892. 

The  railroad  sj'stem  of  the  United  States  has  luul  a 
phenomenal  growth,  especially  since  1870,  since  which 
time  nearly  120,000  miles  of  road,  or  more  than  two-thirds 
of  the  total  mileage,  have  been  constructed.  The  table 
l)elow'  shows  the  number  of  miles  of  railroad  constructed 
and  in  operation,  by  quinquennial  periods  from  1830  to 
the  close  of  1890,  inclusive: 

YEAR.  MILES  IN  OPEUATIOX.  INCREASE. 

1830 23 

1835 1,098 1,075 

1840 2,818 1,720 

1845 4,633 1,815 

1850 •),021 4,388 

1855 18.374 9.353 

1860 30,626 12,253 

1865 35,085 4,459 

1870 53,922 17,837 

1875 74,096 31,174 

1880 93,396 19,200 

1885 128,361 35,065 

1890 166.817 38,456 

It  will  be  noticed  that  in  the  sixty  3'ears  covered  by  the 
above  table  there  are  but  two  quinquennial  period^  which 
show  a  falling-off  in  the  rate  of  growth,  viz. :  1800-65 
and  1875-80.  During  the  former  period  railroad  con- 
struction was  partially  checked  by  the  War  of  the  Rebel- 
lion, during  the  latter  by  the  general  financial  depression 
following  the  panic  of  1873. 

The  length  of  railroads  in  the  world  has  grown  from 
206  miles  in  1830  to  about  400,000  miles  in  1892.  The 
following  table  shows  the  growth  of  railroad  mileage  by 
quinquennial  periods: 


88  The  Railroad  Qufstion. 

YEAB.  MILES.  YEAR,                                       MILES. 

1830 206              1865 90,380 

1835 1,503             1870 131,638 

1840 5,335              1875 183,937 

1845 10,835              1880 331,190 

1850 23,625              1885 303,173 

1855 42,340              1890 385,000 

1860 66,413 

-  From  this  table  it  is  seen  that  the  railroad  mileage  of 
the  world  has  doubled  during  the  past  fifteen  years,  and 
that  its  average  annual  increase  is  at  present  not  far  from 
17,000  miles.  There  is  no  doubt  that  the  extent  of  rail- 
road construction  has  everywhere  exceeded  all  anticipa- 
tions. So  fast  has  the  railroad  system  expanded  in  the 
most  highly  civilized  countries  that  it  soon  outgrew  in 
nearly  all  of  them  the  laws  originally  adopted  for  railroad 
control.  In  time  an  almost  universal  demand  arose  for 
reform,  and  the  most  progressive  governments  were  not 
slow  in  heeding  it.  For  the  past  fifteen  years  there  has 
been  a  decided  drift  on  the  European  continent  toward 
state  ownership  of  railroads,  or  to  such  strict  control  of 
the  transportation  business  as  virtually  deprives  the  oper- 
ating companies  of  the  power  to  do  injustice  to  the  public. 
The  railroad  is  assuming  more'  and  more  the  character 
of  an  international  highway.  A  movement  is  on  foot  to 
connect  the  railroad  systems  of  the  United  States  with 
those  of  South  America  by  an  intercontinental  or  ' '  Pan- 
American  "  railroad.  Appropriations  have  been  made  by 
the  United  States  and  several  of  the  South  American 
republics  for  a  preliminary  survey  of  the  proposed  line. 
Three  different  surveying  parties  are  in  the  field,  one  in 
Central  America  and  the  other  two  in  the  United  States  of 
Colombia  and  Ecuador.  The  progress  so  far  reported  by 
them  is  encouraging,  and  there  is  now  some  hope  that 


IJistorj/  tif  Rdilrodd.s  in  tlic  United  JStatcs.  89 

before  the  close  of  the  nineteeutli  century  one  may  be  able 
to  travel  by  railroad  from  New  York  to  Valparaiso  without 
even  a  change  of  cars. 

It  has  also  been  proposed  to  span  Behring  Strait  and 
connect  North  America  with  Asia  and  Europe  by  an  inter- 
national railway.  This  line,  if  constructed,  would  be 
simply  an  extension  of  the  proposed  Pan-American  rail- 
road and  would  follow  the  western  coast  of  the  United 
States  as  far  as  Behring  Strait,  then  cross  over  into  Asia, 
traverse  Siberia  and  finally  reach  London  via  St.  Peters- 
burg, Berlin  and  Paris.  It  is  very  questionable  whether 
such  a  line  is  at  present  feasible  either  from  a  technical 
or  financial  point  of  view,  but  the  time  will  probably  come 
when  the  railroad  track  will  connect  New  York  and 
London. 


CHAPTER  IV. 

MONOPOLY  IN  TRANSPORTATION. 

FROM  time  immemorial  efforts  have  been  made  by 
designiug  men  to  control  either  commerce  or  its 
avenues,  the  highwa3's  on  the  land  and  on  the  sea,  by  a 
power  which  law,  custom,  ingenuity,  artifice  or  some  other 
agency  had  placed  into  their  hands. 

The  ancient  Phoenicians  early  aimed  at  and  finally 
oljtained  the  empire  of  the  sea  by  making  themselves 
masters  of  the  most  commodious  harbors  of  the  Mediter- 
ranean Sea  and  the  Arabian  Gulf.  They  established  a 
regular  intercourse  with  the  countries  bordering  on  the 
Mediterranean  as  well  as  with  India  and  the  eastern  coast 
of  Africa.  From  these  latter  countries  they  imported 
many  valuable  commodities  which  were  not  known  to  the 
people  of  other  parts  of  the  world,  and  during  a  long 
pe^^iod  they  held  this  lucrative  branch  of  commerce  with- 
out a  rival.  The  character  and  the  situation  of  the  Phoe- 
nicians aided  them  greatly  in  acquiring  this  mastery  of 
commerce.  Neither  their  manners  and  customs  nor  their 
institutions  showed  any  marked  national  peculiarity;  they 
had  no  unsocial  prejudices  and  they  mingled  with  the 
people  of  other  countries  without  the  least  scruple  or 
repugnance.  As  their  native  country  was  small  and  quite 
barren,  they  early  learned  to  rely  upon  commerce  as  the 
best  source  of  riches  and  power.  Like  the  other  Semitic 
ti-ilies,  the  Phoenicians  were  noted  for  their  energy  and 
acumen,  and  while  thej'  were  not  a  literary  people  in  the 
strict  sense  of  the  word,  ancient  civilization  received  prob- 
ably a  more  powerful  impetus  through  their  commercial 
supremacy  than  through  any  other  agency. 


Moiiojiiil  1/  ill   Tr(tii.'<j>nrf<it!())i .  91 

During  the  reigu  of  King  Solomon  the  Jews  made  an 
attempt  to  wrest  from  the  Phoenicians  at  least  a  part  of 
the  world's  trade.  Solomon  built  ships  and  imported 
Phanician  sailors  for  his  fleet.  For  a  time  it  seemed  as 
if  the  Israelites  might  become  the  rivals  of  their  teachers 
in  the  art  of  navigation  and  in  the  mysteries  of  trade ;  but 
their  peculiar  religions  customs  in  that  earl}'  day  proved  a 
serious  impediment  to  commercial  ascendancy,  as  it  rend- 
ered them  incapable  of  that  unreserved  intercourse  with 
strangers  so  essential  in- commerce. 

The  monopoly  of  the  sea,  at  least  of  the  Mediterranean, 
passed  to  the  Carthaginians,  their  descendants.  The 
latter  extended  their  navigation  toward  the  west  and 
north.  They  planted  colonies  and  opened  new  harljors, 
and  up  to  the  time  of  the  Punic  wars  kept  almost  the 
entire  trade  of  the  countries  bordering  on  the  Mediter- 
ranean in  their  hands. 

After  the  downfall  of  Carthage  the  control  of  the  com- 
merce of  Southern  Europe  and  Northern  Africa  descended 
to  the  Romans.  When  Rome  became  the  capital  of  the 
world,  it  gathered  the  wealth  and  valuable  productions  of 
all  its  provinces.  Under  the  consuls  and  the  earlier 
emperors  the  vigilance  of  the  Roman  magistrates  and  the 
spirit  of  the  Roman  government  gave  every  possible 
security  to  commerce  and  prevented  for  a  time  the  rise  of 
monopoly.  Nowhere  was  national  union  so  complete  or 
commercial  intercourse  so  perfect  as  in  the  Roman  empire. 
The  intelligence  and  the  power  of  Rome  stimulated  and 
regulated  the  industry  of  her  people  and  permitted  them 
to  enjoy  the  fruits  of  their  efforts  without  public  or  private 
restrictions. 

We  have  seen  that  the  intercourse  of  Rome  and  her 
provinces  was  facilitated  by  the  construction  of  roads  and 


92  The    Riiilnmtl  Qiirsfion. 

the  establishment  of  imperial  posts.  During  the  decline 
of  the  empire  the  maintenance  of  these  posts  led,  how- 
ever, to  a  grave  abuse.  We  are  informed  b^'  Gibbon  in 
his  " Decline  and  Fall  of  the  Roman  Empire": 

"But  these  beneficial  establishments  were  accidentally 
connected  with  a  pernicious  and  intolerable  a1)use.  Two 
or  three  hundred  agents  or  messengers  were  employed, 
under  the  jurisdiction  of  the  master  of  the  offices,  to 
announce  the  names  of  the  annual  consuls  and  the  edicts 
or  victories  of  the  emperors.  They  insensibly  assumed 
the  license  of  reporting  whatever  they  could  observe  of  the 
conduct  either  of  the  magistrates  or  private  citizens,  and 
were  soon  considered  as  the  eyes  of  the  monarch  and  the 
scourge  of  the  peo})le.  Under  the  warm  influence  of  a 
feeble  reign  they  multiplied  to  the  incredible  numl/cr  of 
ten  thousand,  disdained  the  mild  though  frequent  admo- 
nitions of  the  laws,  and  exercised  in  the  profitable  man- 
agement of  the  posts  a  rapacious  and  insolent  oppression. 
These  official  spies,  who  regularly  corresponded  with  the 
palace,  were  encouraged  by  favor  and  reward  anxiously  to 
watch  the  progress  of  every  treasonaljle  design,  from  the 
faint  and  latent  symptoms  of  disalTection  to  the  actual 
preparation  of  an  open  revolt.  Their  careless  or  criminal 
violation  of  truth  was  covered  by  the  consecrated  mask  of 
zeal;  and  they  might  securely  aim  their  poisoned  arrows 
at  the  breast  either  of  the  guilty  or  the  innocent,  who  had 
provoked  their  resentment." 

After  the  downfall  of  the  Romans,  commerce  remained 
paralyzed  during  the  period  of  Gothic  ignorance  and  liar- 
barism.  The  crusades  for  the  recovery  of  the  Holy  Land 
from  the  Saracens,  in  the  eleventh  and  following  cen- 
turies, opened  again  communication  between  the  east  and 
the  west  by  leading  multitudes  from  every  European 
country  into  Asia;  and  though  the  object  of  these  expe- 
ditions was  conquest,  and  not  commerce,  their  commercial 
effects  were  both  beneficial  and  permanent.  The  crusades 
were  especially  favorable  to  the  commercial   pursuits  of 


Mouojioh/  ill    Tr<tnspi)rt(itii>ii .  93 

the  Italian  states.  The  vast  armies  which  marched  from 
all  parts  of  Europe  toward  Asia  gave  encouragement  to 
the  shipping  of  Venice,  Genoa,  and  Pisa,  which  some- 
times transported  them,  and  always  supplied  thfem  with 
provisions  and  military  stores.  Besides  the  immense 
sums  which  these  states  received  on  this  account,  they 
obtained  commercial  privileges  of  great  consequence  in 
the  settlements  which  the  crusaders  made  in  the  East. 
All  the  commodities  which  they  imported  or  exported 
were  exempted  from  every  imposition,  the  property  of 
entire  sul^urbs  in  some  of  the  maritime  towns,  and  of 
large  streets  in  others,  was  vested  in  them,  and  all  ques- 
tions arising  among  persons  residing  within  their  precincts, 
or  who  traded  under  their  protection,  wera  decided  by 
their  own  laws  and  by  judges  of  their  own  appointment. 
When  the  crusaders  took  Constantinople,  the  Venetians 
did  not  neglect  to  secure  to  themselves  many  advantages 
from  that  event.  Nearly  all  the  branches  of  commerce 
were  in  time  transferred  from  Constantinople  to  their  city. 
At  the  end  of  the  crusade  period  Venice  had  monopolized 
nearl}'  all  the  foreign  trade  of  Europe.  She  supplied  the 
people  of  Italy,  France  and  Germany  with  those  commodi- 
ties with  which  the  crusaders  by  their  intercourse  with  more 
refined  nations  had  become  acquainted.  The  possession 
of  many  Eastern  ports  and  the  maintenance  of  a  powerful 
nav3'  made  it  possible  for  the  Venetians  to  retain  their 
monopoly  for  several  centuries. 

The  growth  of  commerce  in  Central  Europe  was  but 
slow,  owing  to  the  dangers  to  which  it  was  exposed  in 
those  days  of  feudalism.  The  mountain  fastnesses  of 
robber  knights,  which  controlled  every  road  and  navigable 
river,  were  so  many  toll-gates  at  which  the  wayfaring 
merchant  was  stopped  to  pay  tribute.      In  time  this  sys- 


94  The  Railroad  Question. 

tern  of  plunder  grew  to  sucli  tin  extent  that  hundreds  of 
feudal  lords  relied  upon  it  for  their  support.  Such  a  tax 
upon  commerce  greatly  enhanced  the  value  of  all  com- 
modities, and  this  deplorable  state  of  things  lasted  until 
the  cities  made  their  power  felt  by  forming  alliances  for 
mutual  protection.  One  of  these  alliances,  the  Rhenish 
League,  comprised  in  time  seventy  towns,  and  the  ruins 
of  the  strong  castles  destroyed  b}'  its  forces  still  exist 
along  the  Rhine,  picturesque  memorials  of  those  lawless 
times. 

Perhaps  the  most  powerful  commercial  union  of  the 
middle  ages  was  the  Hanseatic  League.  To  protect  their 
commerce,  the  •  cities  of  Hamburg  and  Lubeck  formed 
about  the  middle  of  the  thirteenth  century  an  alliance  for 
mutual  defense.  The  advantages  derived  from  this  union 
attracted  other  towns  to  the  conf  ederacj'.  In  a  short  time 
about  eighty  of  the  largest  cities  lying  between  the  Baltic 
and  the  Rhine  joined  this  famous  league,  which  in  time 
became  so  formidable  that  its  alliance  wtis  courted  and  its 
enmity  was  dreaded  by  the  greatest  monarchs.  The 
League  divided  its  territory  into  several  districts.  Its 
members,  like  railway  associations  of  the  present  da}', 
made  their  own  laws,  and  met  for  this  purpose  at  regular 
intervals  in  the  city  of  Lubeck.  The  original  object  of  the 
League,  mutual  assistance  against  outside  attacks,  was 
soon  lost  sight  of,  and  its  constantly  growing  power  was 
used  to  obtain  still  greater  commercial  privileges  in  the 
adjoining  countries,  and  even  to  force  their  rulers  to  con- 
cede to  its  members  a  commercial  monopoly.  In  13C1  a 
controversy  arose  between  the  League  and  the  King  of 
Denmark,  which  led  to  a  long  and  bitter  war  between 
them.  This  war  was  participated  in  by  no  less  than 
seventy-seven  cities  on  the  part  of  the  League.   It  termin- 


Monopoh/  ill   TraiisjMrfafioi) 


95 


ated  in  1?>70,  leaving  tlie  Hansa  master  of  the  situation. 
For  many  years  after  tliis  tlie  League  exerhnl  its  power  in 
Denmark,   Swinlen  and  Norway,  and  tlie  rulers  of  these 
countries  were  compelled  to  respect  the  wishes  and  even 
submit   to   the   orders  of   these   proud  merchants.       The 
countries  bordering  on  the  Baltic  Sea  remained  the  domain 
of  the  League  for  several  centuries.     They  gathered  then; 
immense  quantities  of  raw  material,  which  they  sold  in  the 
various  ports  of  Europe.      The  influence  of  the   League 
even  reached  as  far  as  Novgorod  in  the  east  and  London 
in  the  west.      In  both  cities  the  League  had  its  quarters, 
and  within  them  it  virtually  exercised  the  right  of  sov- 
ereignty.     Its  main  market  was  at  Bruges  in  Flanders, 
which  was  then  a  bee-hive  of  industry  and  thrift.      Thei-e 
the  Italian  traders  came  with  the  products  of  the  east, 
such  as  spices,  perfumes,  oil,  sugar,   cotton  and  silk,   to 
exchange  them  for  the  raw  materials  of  the  north.     While 
taxes  and  imposts  everywhere  else  harassed  merchants, 
commerce  was  free  in  the  cities  of  Flanders,  owing  to  the 
liberality,  or  rather  shrewdness,  of  her  rulers.    In  Bruges 
the  members  of  the  Hansa  met  the  merchants  of  Venice 
on  equal  terms,  and  the  exchange  of  the  products  of  the 
north  for  those  of  the  east  and  south  could  be  eft'ected 
there  to  the  greatest  advantage  of  both. 

While  it  must  be  admitted  that  the  Hanseatic  League 
developed  the  resources  of  Northern  Europe,  and  that, 
even  at  the  time  of  its  greatest  power,  there  was  always 
competition  among  its  own  members,  the  fact  remains 
that  it  abused  its  power  by  the  suppression  of  all  outside 
competition,  and  that  it  usurped  rights  which  belong  only 
to  the  state,  thus  often  producing  abuses  as  great  as  those 
which  it  was  organized  to  remedy.  Its  final  downfall 
was  caused  by  the  development  of  national  power  in  the 


96  The    luiilroKil    (Jidsfi'nii. 

northern  kingdoms  and  the  growth  of  commerce  and  xtiavi- 
gation  in  Great  Britain.  A  stubborn  assertion  of  anti- 
quated privileges  on  the  part  of  the  Hansa  involved  it  in 
a  feud  with  the  illustrious  and  lion-hearted  Qneen  Eliza- 
beth of  England.  In  1589  the  Queen  caused  sixt}'  of  their 
vessels  to  be  captured  on  the  Tagus,  and  later  even  took 
possession  of  their  hall  and  wharves  in  London.  After 
this  the  League's  decline  was  very  rapid,  though  its  organ- 
ization was  kept  up  till  1GG9,  when  its  delegates  held 
their  last  session. 

Contemporary  with  the  decline  of  the  Hanseatic  com- 
merce in  the  north  was  that  of  the  Italian  cities,  especially 
Venice,  in  the  south.  They  had  prospered  b}'  their  com- 
merce with  the  Levant  until  A'asco  de  Gama  discovered 
the  sea  route  to  East  India  in  1497.  His  countrymen,  the 
Portuguese,  soon  utilized  this  discovery.  They  took  pos- 
session of  the  coast  of  India  and  of  the  islands  to  the 
south  of  it.  They  also  succeeded  in  excluding  the  Arabs 
from  the  commerce  Avith  that  country,  of  which  up  to  that 
time  they  bad  had  exclusive  control.  For  this  purpose 
tliev  built  fortresses  and  factories  on  the  west  coast  of 
Hindostan,  took  possession  of  the  island  of  Socotra  in  the 
Aral)ian,  and  of  Ormus  in  the  Persian  Gulf,  and  forced  the 
Indian  princes  to  grant  them  the  exclusive  privilege  of 
trading  with  their  subjects.  They  also  captured  the  city 
of  Malacca,  where  the  trade  between  China,  Japan,  the 
Philippine  Islands,  the  Moluccas  and  India  had  concen- 
trated itself.  In  this  way  they  got  in  a  comparatively 
short  time  control  of  the  commerce  of  India,  Arabia,  and 
even  Eg3-pt.  By  forcing  the  Venetians  and  their  com- 
mercial allies  out  of  those  markets,  they  secured  for 
themselves  a  monopoly  of  the  commerce  between  Europe 
and  the  east.      The  political  ascendancy  of  the  Turks  in 


MnnopoTji  ill   7\'(ni,sj)ortati<>)i .  97 

r 

the  islands  situated  in,  and  in  the  countries  bordering  on, 
the  Eastern  Mediterranean,  caused  the  loss  of  Cyprus, 
Crete  (Candia)  and  Morea  to  the  Venetians  and  greatly 
aided  the  Portuguese  in  establishing  their  commercial 
supremacy.  Less  profitable  for  the  latter  was  the  pos- 
session of  their  American  colonies.  They,  as  well  as  the 
Spaniards,  adopted  here  a  policy  which  ultimately  brought 
commercial  and  industrial  ruin  upon  both.  Entirely 
neglecting  agriculture  and  relying  on  the  mineral  resources 
of  their  transatlantic  colonies,  which  were  believed  to  be 
inexhaustible,  they  strove  to  amass  riches  by  reserving 
for  themselves  the  exclusive  privilege  of  supplying  them 
with  the  manufactures  of  Europe  in  exchange  for  Amer- 
ican gold.  Neglecting  home  industries,  they  bought  their 
supplies  as  well  as  those  of  their  colonies  in  France,  Hol- 
land and  England.  A  spirit  of  speculation  and  adventure 
enervated  their  people,  and  led  in  time  to  commercial 
bankruptcj^  and  political  disaster. 

Spain  also  drained  her  treasury  by  her  wars  with  her 
Dutch  dependencies,  and  the  loss  of  her  northern  prov- 
inces was  a  serious  blow  to  her  commerce.  Antwerp, 
which  had  become  the  successor  of  Bruges  as  the  com- 
mercial emporium  of  the  north,  began  to  decline,  and 
Amsterdam,  the  metropolis  of  the  new  Dutch  republic, 
became  heir  to  its  glory  and  its  riches.  The  young 
republic  at  once  commenced  to  compete  in  the  carrying 
trade  with  Spain  and  Portugal,  and  to  make  inroads  into 
the  eastern  commerce  of  the  latter. 

The  Dutch  East  India  Company,  which  was  organized 
in  1602,  sent  a  fleet  of  fourteen  vessels  into  the  Indian 
Archipelago  to  found  colonies  in  Java,  Sumatra  and  the 
Moluccas.  In  a  short  time  they  had  monopolized  the 
entire  spice  trade,  which  immediately  became  a  source  of 


98  The  Railroad    Question. 


great  wealtli.  A  cargo  of  five  vessels,  which  returned  to 
Amsterdam  in  1003,  consisted  of  over  two  million  pounds 
of  spices.  This  cargo  was  purchased  for  588,874  florins 
and  was  sold  for  2,000,000  florins.  It  is  under  these 
circumstances  not  surprising  that  the  dividends  of  the 
companj^'s  stockholders  often  amounted  to  75  per  cent. , 
and  never  went  below  12^  per  cent,  previous  to  1720. 
Holland's  colonial  trade  made  Amsterdam  the  commercial 
metropolis  of  Europe.  It  became  the  grain  market  from 
which  Spain,  Italy  and  other  countries  drew  their  supplies. 
All  the  products  of  the  world  found  purchasers  here,  and 
a  well-developed  banking  system  greatly  facilitated  the 
exchange.  The  rapid  accumulation  of  fortunes  by  the 
Dutch  merchants  and  bankers  was  without  precedent  in 
Europe.  Besides  this,  the  progress  which  Holland  made 
in  ship-building  and  navigation  and  the  advantages  which 
she  derived  from  her  colonial  trade  placed  her  in  a  posi- 
tion to  outstrip  all  other  nations  in  the  carrying  trade  of 
Europe.  During  the  first  half  of  the  seventeenth  cen- 
tury the  Dutch  were  justly  called  the  freighters  of  Europe. 
But  the  injury  which  their  policy  did  to  the  commercial 
and  manufacturing  interests  of  other  European  nations 
led  both  England  and  France  to  adopt  measures  well  cal- 
culated to  accomplish,  in  a  short  time,  their  commercial 
emancipation.  Louis  XIV. ,  in  order  to  build  up  French 
shipping,  collected  a  tonnage  from  every  foreign  ship 
which  entered  a  French  harbor.  England  went  still 
further.  In  1651  Oliver  Cromwell  promulgated  the  Navi- 
gation Act,  by  which  foreign  ships  were  prohibited  from 
importing  into  England  any  goods  except  such  as  were 
produced  or  manufactured  in  their  own  countries.  This 
was  a  heavy  blow  at  the  Dutch,  who  were  thus  deprived 
of  the  privilege  of  efl'ecting  the  exchange  of  commercial 


Monopnly  in  Transporfafinu  .  99 


commodities  between  England  and  her  colonies  as  well  as 
the  continent.  The  war  which  the  Dutch  Republic  waged 
against  England,  to  force  her  to  revoke  this  act,  resulted 
in  favor  of  the  latter  and  ended  the  commercial  supremacy 
of  the  Dutch  in  Europe. 

England,  which  before  this  time  had  pla^'ed  but  a  sec- 
ondary role  as  a  commercial  power,  rose  fast  to  promi 
nence  after  her  successful  struggle  with  the  Dutch.  She 
commenced  to  strengthen  her  industries  by  the  adoption 
of  a  high  tariff  policy,  and  her  merchants  were  encouraged 
to  enter  into  commercial  relations  with  colonists  and  for- 
eigners. The  privileges  which  had  been  given  to  foreign 
tradesmen  were  revoked,  while  ship-building  and  naviga- 
tion were  greatly  favored  by  the  government.  As  Eng- 
land gained  greater  strength  as  a  naval  power,  her  foreign 
policy  became  more  aggressive. 

In  1600  the  "  Company  of  Merchants  of  London  Trad- 
ing to  the  East  Indies  "  obtained  a  charter,  and,  in  spite 
of  Dutch  and  Portuguese  opposition,  soon  gained  a  foot- 
hold on  the  Moluccas  and  the  coast  of  Malabar,  whence  ilr 
extended  in  time  its  dominion  to  Surat,  Bombay,  Madras 
and  Calcutta.  Here  they  built  forts  and  established  their 
commerce.  From  these  places  the  company  pushed  into 
the  interior,  until  finally,  after  repeated  struggles  with 
the  natives  and  European  rivals,  the  whole  of  Hindostan 
came  under  English  dominion.  As  its  power  increased, 
the  company  commenced  to  abuse  shamefully  the  mon- 
opoly which  it  had  been  granted,  by  inaugurating  a  system 
of  plunder  and  oppression  which  is  perhaps  without  its 
equal  in  the  annals  of  history.  These  growing  abuses  led 
to  frequent  revolts  and  seriously  imperiled  England's 
dominion  in  these  territories. 

To  remedy  these  e^ils,  Parliament  at  the  close  of  the 


100  The  RaUrodil  Q  it  est  Ion. 

seventeenth  century  annulled  the  charter  of  the  company 
and  declared  the  commerce  with  the  East  Indies  open  to 
all  of  the  King's  subjects.  A  number  of  small  companies 
were  formed,  but  in  1702  they  all  combined  and  organized 
the  East  India  Company.  Monopoly  was  again  estab- 
lished, but  the  patience  of  the  natives  was  exhausted,  and 
England's  interests  in  Hindostan  were  in  a  critical  con- 
dition. At  this  juncture  the  East  India  Company 
adopted  a  policy  of  moderation,  and  this,  together  with 
the  aid  which  the  government  gave  to  the  company, 
enabled  it  to  strengthen  again  its  weakened  commercial 
relations  and  to  further  enlarge  its  territory.  But  the 
temptation  to  abuse  its  power  was  too  great  for  this 
strong  corporation  to  be  long  resisted.  Abuses  again 
crept  into  its  management  and  continued  to  grow  until  its 
charter  was  finallj'  repealed. 

The  policy  adopted  by  Great  Britain  for  the  govern- 
ment of  her  American  colonies  during  the  eighteenth 
century  was  less  rapacious,  but  scarcely  more  just  than 
'  that  pursued  in  her  eastern  possessions.  To  retain  those 
colonies  as  commercial  no  less  than  as  political  depend- 
encies. Parliament  enacted  laws  compelling  their  people 
to  trade  with  the  mother  country  exclusively  and  laying 
restraint  on  their  manufactures.  But  the  American  pio- 
neers felt  that  they  had  brought  with  them  across  the 
ocean  the  rights  of  Englishmen;  they  objected  to  taxation 
without  representation,  and  the  men  who  for  opinion's 
sake  had  left  comfortable  homes  to  brave  upon  a  distant 
shore  the  dangers  of  frontier  life  were  prepared,  if  neces- 
sary, to  emphasize  their  objection  by  armed  resistance. 
England,  intent  upon  maintaining  her  barbaric  system  of 
discriminative  duties  and  commercial  monopolies,  blindly 
attempted  coercion,  but  the  war  which  resulted  wrested 


Moiiojxil If  ill    Triiiispnrfnd'oti .  101 

from  the  English  crown  its  brightest  jewel,  and  the  War 
of  1812  established  upon  American  soil  the  principle  of 
industrial  and  commercial  libert}'. 

It  must  not  be  supposed,  however,  that  America  and 
the  United  States  in  particular  have  been  free  from  mono- 
polies growing  out  of  the  transportation  business.  Nothing 
would  be  farther  from  the  truth.  There  is  no  law  so 
stringent  but  that  it  will  be  violated ;  there  is  no  govern- 
ment so  vigilant  but  that  it  will  at  times  be  imposed  upon. 
It  is  true,  our  government  sanctions  no  monopol}^,  but  the 
very  liberty  of  action  which  exists  here  among  corpora- 
tions as  well  as  individuals  offers  to  organized  wealth  and 
power  a  wide  field  for  abuses. 

We  have  seen  in  the  foregoing  that  almost  from  time 
immemorial  efforts  have  been  made  to  monopolize  trans- 
portation and  trade,  and  that  these  efforts  were  successful 
whenever  either  from  ignorance  or  weakness  the  masses 
fell  into  political  apathy.  There  is  a  natural  tendency 
among  men  to  utilize  commercial  advantages  to  the  detri- 
ment of  others.  In  modern  times  the  opportunities  for 
building  up  large  monopolies  have  greatly  increased  and 
have  been  turned  to  the  most  profitable  account  by  design- 
ing men.  Great  and  even  unbearable  abuses  have  alwa^^s 
followed  where  the  greed  and  ambition  of  such  men  have 
not  been  checked  by  governmental  agencies.  In  this 
respect  the  people  of  the  United  States  have  had  about 
the  same  experience  as  the  rest  of  mankind.  Ever  since 
the  introduction  of  railroads  into  this  country  there  has 
been  a  well-marked  drift  toward  monopolizing  the  trans- 
portation business. 

As  long  as  the  dangers  of  monopoly  remained  unknown 
to  the  American  people,  legislation  for  the  control  of  rail- 
roads and  other  public  carriers  was  both  scarce  and  crude, 


]  U2  The  Railroad  Question. 

and  shrewd  railroad  men  were  not  slow  in  taking  advan- 
tage of  the  situation.  It  is  foreign  to  the  design  of  this 
treatise  to  give  a  .complete  history  of  railroad  monopoly  in 
the  United  States.  The  author  will  therefore  confine 
himself  to  showing  that  transportation  companies  will, 
like  the  great  commercial  organizations  of  the  past,  when 
left  to  follow  their  instincts,  invariably  use  their  power  to 
oppress  the  public  by  exacting  excessive  charges  for  their 
services,  or  to  discriminate  against  the  many  by  extending 
special  privileges  to  the  few.  Hundreds  of  cases  might 
be  given  to  illustrate  the  above  rule,  but  a  histor}'  of  two 
of  these  corporations  will  suffice  to  show  to  what  extent 
corporate  abuses  can  be  carried,  and  to  serve  as  a  warning 
against  the  adoption  of  any  "  laissez  falre  "  policy  in  the 
railroad  legislation  of  the  future.  The  corporations 
selected  for  this  purpose  are  the  Camden  and  Amboj^ 
Railroad  and  the  Standard  Oil  Companies,  both  tj^ical 
representatives  of  the  Rob  Roy  policy  which  organized 
wealth  has  pursued  since  the  dawn  of  civilization,  when 
not  prevented  by  the  wisdom  and  strength  of  a  good 
government. 

THE    CAMDEN    AND    AMBOY    RAILROAD    COMPANY. 

For  almost  forty  years  the  Camden  and  Amboy  Rail- 
road was  the  only  direct  route  between  the  cities  of  New 
York  and  Philadelphia.  It  is  doubtful  whether  previous 
to  the  war  a  more  important  or  a  more  remunerative  road 
existed  in  the  United  States,  for,  besides  connecting  the 
two  largest  cities  in  the  Union,  it  formed  part  of  the 
direct  land  route  from  the  East  to  the  South. 

The  efforts  to  open  a  direct  through  route  between  New 
York  and  Philadelphia  date  back  to  the  year  1812,  when 
the  construction  of  a  canal   between   the  Hudson  and  the 


Monopoly  III   Transportation.  103 

Delaware  was  proposed,  but  an  ill-advised  jealousy  of  the 
State  of  Pennsylvania  delayed  for  many  years  the  realiza- 
tion of  the  project.  When  this  obstacle  was  finally  over- 
come, a  change  of  sentiment  had  taken  place  in  New  Jer- 
sey. Railroads  had  just  made  their  appearance  in  the 
United  States,  and  a  large  number  of  the  people  of  New 
Jersey  preferred  a  railroad  to  a  canal. 

The  matter  was  finally  compromised  in  the  legislature 
of  New  Jersey,  which  on  the  4th  of  February,  1830,  simul- 
taneously granted  charters  to  the  Delaware  and  Raritan 
Canal  Company  and  the  Camden  and  Amboy  Transporta- 
tion Company,  fixing  the  capital  stock  of  each  company 
at  $1,000,000,  with  the  right  to  increase  it  to  $1,500,000. 
The  charter  further  stipulated  what  taxes  should  be  paid 
to  the  State,  and  also  contained  the  provision  that  within 
five  miles  of  the  starting-point  and  within  three  miles  of 
the  terminus  of  each  line  no  other  railroad  or  canal  should 
be  built.  It  was  believed  the  existence  of  both  a  water 
and  a  land  route  would  be  sufficient  to  maintain  compe- 
tition on  this  important  thoroughfare  of  interstate  traffic. 
The  construction  of  the  railroad,  which  had  been  surveyed 
in  almost  a  straight  line  between  its  termini,  was  at  once 
commenced.  A  number  of  well-to-do  and  practical  men 
took  hold  of  the  enterprise,  among  them  one  John  Stevens. 
who  together  with  his  three  sous  took  one-half  of  the 
capital  stock.  The  canal  project  did  not  do  so  well  at 
first.  At  the  middle  of  the  year  1830  only  about  one- 
twelfth  of  its  capital  stock  had  been  sold,  and  there  was 
great  danger  that  the  company  might  forfeit  its  charter, 
as  the  time  allowed  for  the  subscription  of  its  stock  was 
nearing  its  end.  At  this  juncture  Robert  Field  Stockton, 
a  young  man  of  ability,  enthusiasm  and  wealth,  came  to 
the  rescue  of  the  canal  company.      He  not  only  bought 


104  The  Railroad   Question. 

for  himself  a  goodly  share  of  the  canal  stock,  but  also 
prevailed  on  his  rich  father-in-law,  Mr.  John  Porter,  to 
invest  $400,000  in  the  enterprise.  The  financial  difficul- 
ties of  the  company  were  thus  removed.  At  the  next 
session  of  the  legislature  Mr.  Stockton  secured  an  amend- 
ment to  their  chf.rter  which  apparently  only  authorized 
the  enlargement  of  the  canal,  but  in  reality  empowered 
the  canal  company  to  construct  a  second  railway. 

It  was  from  the  beginning  Mr.  Stockton's  object  to 
share  with  the  railroad  company  the  advantages  which 
their  line  promised  to  give  them.  The  enlargement  of 
his  company's  franchise  placed  him  in  a  position  to  dictate 
terms  to  the  Camden  and  Amboy  Transportation  Com- 
pany. The  latter  was  given  the  choice,  to  prepare  for 
competition  with  a  rival  railroad  line,  or  to  consolidate 
with  the  Delaware  and  Raritan  Canal  Company.  It  chose 
the  latter  alternative,  and  on  the  15th  day  of  February, 
1831,  the  two  companies  became  one.  The  consolida- 
tion still  required  the  sanction  of  the  legislature.  This  was 
obtained  in  consideration  of  the  transfer  of  2,000  shares  of 
the  capital  stock  of  the  company  to  the  State.  It  was  fur- 
ther stipulated  that  the  new  company  should  pay  to  the  State 
a  tax  of  10  cents  for  each  passenger  and  of  15  cents  for 
each  ton  of  freight  carried  over  its  line  through  the  State, 
as  well  as  an  annual  tax  of  $30,000,  and  that  the  State  in 
return  should  protect  the  company  against  any  and  all 
competition  in  the  direct  passenger  and  freight  traffic 
between  the  cities  of  New  York  and  Philadelphia.  Serious 
doubts  were  at  the  time  entertained  by  many,  whether 
the  State  of  New  Jersey  under  the  Federal  Constitution 
possessed  the  right  to  thus  create  a  monopoly  in  trans- 
portation facilities,  and  to  regulate  arbitrarily  the  com- 
merce between  sister  States. 


Monopoly  in  Tratisporfafioii .  105 

Five  days  after  it  had  granted  this  charter  to  the 
Camden  and  Amboy  Company,  the  legislature  granted 
another  charter  authorizing  the  construction  of  a  railroad 
from  Jersey  City  to  New  Brunswick  on  the  Raritan  River. 
On  the  23d  of  February  of  the  same  year  a  charter  had  been 
granted  by  the  legislature  of  the  State  of  Pennsylvania  to 
a  company  which  had  been  formed  for  the  purpose  of  con- 
structing a  railroad  from  Philadelphia  to  Trenton.  This 
company  had  likewise  been  authorized  by  its  charter  to 
buy  the  right  of  way  for  a  railroad  from  Trenton  to  New 
York,  which  it  proceeded  at  once  to  do.  It  was  evident 
that  as  soon  as  the  two  new  roads  would  meet  at  New 
Brunswick,  an  understanding  would  be  reached  between 
them,  by  which  another  through  line  would  be  created 
between  New  York  and  Philadelphia,  which  would  have 
the  advantage  over  the  Camden  and  Amboy  road  that  it 
touched  the  capital  of  New  Jersey  and  could  thus  make 
itself  serviceable  to  members  of  the  legislature,  officers 
of  State  and  influential  politicians. 

The  Camden  and  Amboy  Freight  Company  soon  arrived 
at  the  conclusion  that  it  could  not  permit  such  rivalry.  It 
appealed  to  the  legislature  for  protection.  Resolutions 
were  passed  in  its  favor,  but  the  Philadelphia  and  Trenton 
Railroad  Company  paid  no  attention  to  those  resolutions, 
but  quietly  continiied  to  lay  its  track.  Mr.  Stockton  and 
his  friends  did  not  dare  to  invoke  the  aid  of  the  courts, 
because  a  judicial  investigation  might  have  resulted  in  the 
destruction  of  their  own  charter.  The  situation  was  crit- 
ical, but  Mr.  Stockton  was  equal  to  the  occasion.  He 
bought  quietly  a  sufficient  number  of  shares  to  control  the 
management  of  the  Philadelphia  and  Trenton  road,  and, 
in  April,  1836,  secured  the  consolidation  of  the  Philadel- 
phia and  Trenton  and  the  Camden  and  Amboy  railroad 
companies. 


106  The  Rrtilroad  Qxesfiou. 

The  canal  of  the^  compaii}'  was  not  completed  iintil 
1838.  It  had  consumed  a  sum  of  money  largely  in  excess 
of  the  original  estimate.  To  connect  the  two  lines  of  the 
consolidated  company,  a  branch  road  was  constructed 
from  Trenton  to  Bordentown.  Later  the  road  from  Tren- 
ton to  Brunswick  was  completed  and  an  agreement  entered 
into  with  the  Jersey  City  company  for  a  division  of  the 
traffic  of  the  two  roads.  The  large  cost  of  these  improve- 
ments suggested  to  the  company'  the  advisability  of 
increasing  its  revenues  and  of  decreasing  its  expenditures. 
Its  charter  provided  for  a  paj'ment  to  the  State  of  10 
cents  for  each  through  passenger.  By  an  artifice  the 
company-  avoided  the  payment  of  this  tax.  It  compelled 
its  through  passengers  to  walk  over  the  bridge  at  Trenton 
and  then  continue  their  journey  by  rail  via  Bordentown  to 
Jersey  City. 

The  company's  charter  also  stipulated  that  the  fare 
between  New  York  and  Philadelphia  should  not  exceed 
$3  per  passenger.  Its  officers  interpreted  this  stipulation 
to  apply  onl}'  to  the  intermediate  traffic  and  proceeded  to 
collect  $2.50  for  the  trip  from  New  York  to  Trenton,  and 
$1.50  from  there  to  Philadelphia,  thus  increasing  the  fare 
for  the  entire  journey  to  $4.00,  one  dollar  above  the  max- 
imum allowed  by  law.  One  Jacob  Ridgway,  who  was  the 
owner  of  a  ferry-boat  at  Camden,  saw  here  an  opportunity 
for  starting  a  lucrative  business.  He  bought  a  steamer 
and  carried  passengers  from  Philadelphia  to  Trenton  for 
one-third  of  the  fare  demanded  b}'  the  railroad.  After 
the  Camden  and  Amboy  Compan}^  had  made  several 
unsuccessful  attempts  to  intimidate  31r.  Ridgway  and  his 
force,  one  of  which  even  brought  Mr.  Stockton  in  contact 
with  the  criminal  courts,  it  purchased  the  boat  with  all 
terminal   facilities   at  Philadelphia   and   Trenton.      The 


MoiKjpoJy  ill   Transportation.  107 

attention  of  the  legislature  of  New  Jersey  was  repeatedly 
called  to  the  company's  failure  to  comply'  with  the  pro- 
visions of  its  charter,  but  these  appeals  were  on  the  whole 
of  no  avail.  In  1842,  after  a  long  discussion,  a  resolu- 
lution  was  carried  declaring  the  charge  of  $4  for  the 
through  journey  illegal,  but  the  company  entirely  ignored 
this  legislative  reminder  and  continued  its  old  tariff. 

The  company's  charter  also  reserved  for  the  State  the 
right  to  acquire  the  Camden  and  Ambo}'  road  under  cer- 
tain conditions  upon  the  payment  of  a  reasonalile  compen- 
sation. In  1844,  through  Mr.  Stockton's  engineering, 
the  constitution  of  New  Jersey  was  so  amended  as  to 
practically  deprive  the  State  of  the  power  to  acquire  the 
company's  property. 

During  the  first  few  years  of  the  existence  of  the  Cam- 
den and  Amboy  Transportation  Company  its  business  was 
managed  in  the  interest  of  its  owners,  but  soon  a  few  of 
its  leading  stockholders  managed  to  turn  its  enormous 
profits  into  their  own  pockets.  The  Stevens  and  Stockton 
families,  together  with  two  other  directors  of  the  Camden 
and  Aiiboy  Company,  had  come  into  possession  of  a  line 
of  steamers  that  plied  on  the  Raritan,  between  New 
Brunswick  and  New  York.  The  enterprise,  in  spite  of  its 
largel}'  watered  capital,  had  been  made  to  pa}'  dividends 
ranging  from  .30  to  40  per  cent.  Its  owners  saw  an  oppor- 
tunit}'  for  a  larger  field  of  usefulness  and  larger  divi- 
dends. In  1834  a  majority  of  the  board  of  directors  of 
the  Camden  and  Amboy  Company  proposed  that  the  com- 
pany rid  itsejf  of  the  responsibility  connected  with  the 
transportation  business  and  lease  its  railroad  and  canal. 
Mr.  Stevens,  as  representative  of  the  Camden  and  Ambo}' 
Compan}',  then  negotiated  with  IMr.  Stevens,  the  repre- 
sent9,tive  of   the   Napoleon    Steamer    Company,  and  the 


108  Tlic  Railroad   Question. 

negotiations  soon  resulted  in  an  agreement  between  the 
two  companies  by  which  the  latter  leased  the  railroad  and 
canal  lines  of  the  former  and  agreed  to  pay  it  a  fixed  toll 
of  $7. 64  per  ton  upon  all  freights  carried  b}'  rail,  and  one- 
quarter  of  all  its  revenues  derived  from  the  canal.  Soon 
afterward  the  Napoleon  Company  entered  into  a  similar 
contract  with  the  Camden  Ferry  Compan}"  and  now  had  a 
complete  monopoly  of  the  transportation  business  between 
New  York  and  Philadelphia.  It  at  once  commenced  to 
develop  a  S3'stem  of  organized  plunder.  Instead  of  the 
maximum  charter  tariff  of  8  cents  per  ton  per  mile,  it 
charged  10,  12,  and  even  15  cents.  The  through  rates 
charged  were  several  times  as  high  as  those  fixed  by  the 
charter.  Canal  rates  were  raised  to  such  an  extent  as  to 
make  them  prohibitorj'  and  to  compel  the  public  to  ship 
by  rail.  It  is  difficult  even  to  estimate  the  total  annual 
profits  of  the  directorial  syndicate.  Their  accounts,  if 
any  were  kept,  were  not  accessible,  and  surmises  can  only 
be  based  upon  such  data  as  occasionally  found  their  way 
to  the  public.  In  1845  the  share  of  the  canal  tolls  paid 
to  the  company's  stockholders  was  $359,000.  The  direc- 
tors' share  under  the  terms  of  their  lease  is  thus  found 
not  to  have  been  less  than  $1,077,000.  Another  item  of 
$170,000,  tolls  collected  for  the  transportation  of  27,000 
tons  of  freight,  was  so  divided  that  the  Camden  Ferry 
Company,  or  its  other  self,  the  directorial  s^-ndicate, 
received  $32,000  for  one  mile,  while  the  Camden  and 
Amboy  Railroad  Company  received  $63,000,  or  less  than 
twice  as  much,  for  ninety-two  miles.  The  directors  under 
their  lease  were  entitled  to  the  remaining  $75,000. 

The  sersice  of  the  company  was  as  bad  as  it  was  ex- 
pensive; its  trains  were  slow  and  irregular,  and  its 
employes  arrogant.     The  syndicate  which  controlled  the 


Monopoly  ill   Tiunsportntion  .  109 

L_ ^ ., 


company  defied  its  stockholders,  the  public  and  the  courts 
alike.  When  one  of  the  stockholders,  a  Trenton  merchant 
by  the  name  of  Hagar,  applied  to  the  courts  for  an  order 
to  compel  the  directors  to  produce  their  books  and  render 
an  account,  the  syndicate  bought  Mr.  Hagar's  shares,  for 
which  he  had  paid  $125  a  share,  at  the  price  of  $1,456  a 
share.  The  suit  was  then  withdrawn  and  the  matter 
hushed  up. 

In  1848  a  number  of  articles  appeared  in  a  paper  pub- 
lished at  Burlington,  Pa.,  which  were  signed  by  "A 
Citizen  of  Burlington "  and  contained  much  surprising 
information  concerning  the  Camden  and  Amboy  Trans- 
portation Company.  It  was  charged  that  the  directors 
had  defrauded  both  the  State  and  the  company's  stock- 
holders of  large  sums  of  money,  that  they  had  grossly 
Aaolated  their  charter  b}'  charging  illegal  and  extortionate 
rates,  oppressive  to  both  commerce  and  travel.  It  was 
shown  that  while  the  average  rate  per  ton  per  mile  of 
thirtj'-five  neighboring  roads  was  2.85  cents,  that  of  the 
Camden  and  Amboy  Company  was  4.54  cents.  It  was 
also  shown  that  neither  the  stockholders  nor  the  State  had 
received  the  shafe  of  the  company's  revenues  to  which 
they  were  entitled.  These  articles  were  extensively 
reprinted  and  caused  a  great  commotion  wherever  they 
appeared.  After  the  first  storm  had  subsided  the  direc- 
tors issued  an  address  to  the  people  of  New  Jersej^  in 
which  they  bitterly  complained  of  the  people's  loss  of 
confidence  in  their  integrity,  and  declared  that  the 
charges  preferred  against  them  were  founded  on  false- 
hoods. 

The  "  Citizen  of  Burlington"  replied  by  accusing  the 
directors  of  defalcation  and  falsifying  their  books.  He 
charged  that  from  1840  to  1847  no  account  had  been 


110  The  Railroad  Question. 

_  _    __      . 

rendered  of  the  receipt  of  no  less  than  15,266,431,  on 
which  $493,066  was  due  to  the  State.  As  soon  as  the 
legislature  convened,  a  resolution  was  introduced  that  a 
commission  be  appointed  to  investigate  the  charges  pre- 
ferred against  the  Camden  and  Amboy  Transportation 
Company.  The  resolution  was  adopted,  but  it  was  vir- 
tually left  to  the  accused  to  select  the  members  of  the 
commission.  That  the  directors  had  a  guilty  conscience 
appeared  from  the  fact  that  the  last  annual  report  of  the 
company,  which  had  just  been  printed,  was  withdrawn 
and  destroyed.  To  silence  their  unknown  accuser,  they 
threatened  him  with  criminal  prosecution.  He  now  gave 
his  name.  It  was  Henry  C.  Carey,  the  noted  writer  and 
authorit}' on  political  economy.  Mr.  Carey  did  not  give 
up  the  contest.  He  proceeded  to  show  how  the  policy  of 
the  managers  of  the  Camden  and  Ambo}'  Transportation 
Company  depressed  commerce,  manufactures  and  agri- 
culture alike.  He  showed  how  the  company  as  a  public 
carrier  discriminated  in  favor  of  industries  which  they 
carried  on  as  private  individuals.  He  claimed  that  the 
companj'  had  forfeited  its  charter,  and  that  it  was  the 
duty  of  the  State  to  authorize  the  construction  of  another 
road.  In  the  meantime,  early  in  1849,  the  legislative 
investigation  committee  submitted  its  report.  It  was 
perhaps  as  shameless  a  document  as  was  ever  placed 
before  a  legislative  assembly.  It  lauded  the  directors,  to 
whose  influence  the  members  of  the  commission  owed  their 
selection,  and  whitewashed  their  past  management  of  the 
company's  affairs. 

But  the  people  of  New  Jersey  were  far  from  being  sat- 
isfied with  this  report  and  demanded  the  appointment  of 
another  committee.  Another  investigation  was  ordered, 
and  this  time  the  company,  or  rather  its  directors,  found 


Monopoly  in   Transportation.  Ill 


it  impossible  to  control  the  selection  of  its  members. 
Soon  after  their  appointment  the  committee  asked  Mr. 
Carey  to  lend  them  his  assistance  in  their  labors,  and  he 
readil}'  consented.  During  the  summer  of  1849  the  mem- 
bers of  the  committee  had  occasion  to  go  to  Bordentown, 
to  inspect  the  company's  books.  From  that  time  on  a 
wonderful  change  seemed  to  have  come  over  the  com- 
mittee. They  found  they  could  dispense  with  Mr.  Carey's 
further  services.  What  had  previously  appeared  to  them 
a  ring  of  rapacious  monopolists  seemed  now  an  association 
of  worthy  philanthropical  gentlemen.  In  their  report  to 
the  legislature  they  completely  exonerated  the  company's 
managers.  They  admitted  that  the  State  had  not  been 
paid  all  that  was  due  to  it,  but  they  asserted  that  this 
difference  in  the  company's  accounts  was  due  solely  to 
clerical  errors,  for  which  the  management  were  in  no  wise 
responsible.  The  report  was  accepted,  although  not  even 
the  annexed  testimony  supported  it,  and  thus  the  matter 
was  dropped. 

This  was  a  great  victory  for  Mr.  Stockton  and  his 
friends.  It  demonstrated  the  success  of  their  methods  of 
dealing  with  public  servants.  Mr.  Carey  repeated  his 
charges,  but  the  directors  failed  to  prosecute  him  for 
libel  as  they  had  threatened.  He  asked  that  he  be  per- 
mitted to  inspect  the  company's  books,  but  was  met  with 
a  peremptory  refusal.  Public  opinion  was  defied,  and  the 
old  methods  were  continued. 

The  extortionate  and  discriminating  tariff  of  the  only 
through  route  of  New  Jersey  affected  seriously  the  agri- 
cultural as  well  as  the  commercial  interests  of  that  State. 
The  Camden  and  Amboy  monopoly  kept  the  State  of  New 
Jersey  for  many  years  far  behind  the  New  England  States 
in  railroad  facilities.     In  1860  New  Jersey  had  only  one 


112  The  Railroad    Question. 

mile  of  railroad  for  every  17.6  square  miles  of  territory, 
while  the  proportion  of  miles  of  railroad  to  square  miles 
of  territory  for  the  same  year  was  1  to  7.9  in  Connecticut, 
1  to  7.6  in  Rhode  Island,  and  1  to  6  in  Massachusetts. 
At  present  New  Jersey  has  one  mile  of  railroad  to  every 
3. 79  square  miles,  and  therefore  leads  all  the  States  in 
the  Union  in  density  of  railroad  track. 

The  question  may  be  asked  how  the  Camden  and  Am- 
boy  Transportation  Company,  or  rather  the  syndicate 
which  controlled  it,  contrived  to  maintain  its  power  for  so 
many  years,  to  the  great  detriment  of  industry  and  com- 
merce. The  only  answer  that  can  be  given  is  that  the 
men  for  whom  the  maintenance  of  the  monopoly  was  a 
source  of  great  wealth  were  constantly  using  a  part  of 
this  wealth  for  the  corruption  of  those  who  were  in  a  posi- 
tion to  influence  public  opinion  or  to  direct  the  policy  of 
the  State.  Prominent  politicians  were  favored  with 
passes,  attorneys  were  retained  by  the  company  as  local 
solicitors,  corrupt  and  servile  legislators  were  bribed  by 
money  or  the  promise  of  lucrative  positions,  and  news- 
papers were  given  large  subsidies.  In  addition  to  this 
public  men  were  constantly  made  to  realize  the  political 
power  of  the  company,  whose  many  employes  had  always 
been  trained  to  do  the  bidding  of  their  masters.  If  the 
opposition,  in  spite  of  this,  was  ever  successful  at  legis- 
lative elections,  the  company's  managers  found  it  less 
expensive  to  gain  the  good  will  of  a  few  members  of  the 
legislature  after  election  than  it  would  have  been  to  gain 
the  good  will  of  their  constituents  before  election.  Dis- 
satisfied stockholders  who  threatened  with  judicial  investi- 
gation were  quietly  bought  out  or  impressed  with  the 
danger  of  inviting  public  discussion  in  regard  to  the  val- 
idity of  the  company's  charter,  as  it  might  lead  to  its 


Mmxtpoli/  ill    Tr(nisj)t)j-fafio)i .  113 


annihilation.  The  good  people  of  New  Jersey  made  sev- 
eral attempts  to  rid  the  State  of  the  despotism  of  the 
company  by  making  the  question  a  political  issue,  but 
they  were  each  time  defeated  through  the  lavish  and 
scandalous  expenditure  of  the  company's-  money. 

The  original  charter  of  the  Camden  and  Amboy  Eailroad 
Company  was  granted  for  a  period  of  twenty  years,  and 
should  have  expired  in  1853,  but  its  managers  succeeded 
in  having  it  extended  to  January  1,  1859.  In  1854 
another  extension  was  asked  for,  and  after  a  long  and 
bitter  debate  the  company  was  again  triumphant.  An  act 
was  passed  on  the  16th  of  March,  1854,  making  it  illegal 
to  build  previous  to  the  first  day  of  January,  1869,  with- 
out the  consent  of  the  Camden  and  Amboy  Transportation 
Company,  a  railroad  in  the  State  of  New  Jersey  for  the 
transportation  of  passengers  and  freight  between  New 
York  and  Philadelphia.  At  the  end  of  this  period  even  a 
third  extension  was  granted,  and  the  compan}^,  though 
after  January  1,  1867,  under  a  new  name,  maintained  its 
monopoly  until  it  consolidated,  in  1871,  with  the  Pennsyl- 
vania Railroad  Company. 

That  the  spirit  of  the  past  is  still  at  work  was  shown  by 
the  recent  act  of  the  legislature  of  New  Jersey  legalizing 
the  consolidation  of  the  coal  roads.  The  coal  barons 
found  the  legislature  as  servile  as  the  managers  of  the 
Camden  and  Amboy  Railroad  Company  had  found  them 
of  yore,  and  their  well-planned  scheme  would  probably 
have  been  successful  had  it  not  been  for  Governor  Abbot's 
courageous  veto  of  the  disgraceful  act,  and  it  is  more  than 
probable  that  they  will  yet  succeed.  They  have,  in  fact, 
during  the  last  year  advanced  the  price  of  coal  about  one 
dollar  per  ton. 


114  The   Railroad    Qnestiun. 

THE    STANDARD    OIL    MONOPOLY, 

The  Standard  Oil  monopoly  may  be  said  to  be  the 
crowning  monument  of  corporation  conspiracy.  It  is, 
indeed,  doubtful  whether  the  combined  brotherhoods  of 
mediaeval  knights  ever  were  guilty  of  such  acts  of  plunder 
and  oppression  as  the  Standard  Oil  Company  and  its  rail- 
road allies  stand  convicted  of  before  the  American  people. 
The  facts  that  have  been  unearthed  by  official  investiga- 
tions show  a  frightful  prevalence  of  corporate  lawlessness 
and  official  corruption,  and  there  can  be  no  doubt  that, 
could  certain  high  railroad  dignitaries  have  been  compelled 
to  testify,  and  could  the  truth  have  been  fathomed,  it  would 
have  been  found  that  not  only  tha  public,  but  railroad 
stockholders  as  well,  were  victimized  by  those  trans- 
actions. 

The  founder  of  the  Standard  Oil  monopoly  was  some 
twenty  years  ago  part  owner  of  a  petroleum  refinery  at 
Cleveland,  Ohio.  His  fertile  brain  conceived  the  thought 
that  with  the  cooperation  of  the  railroad  companies  a  few 
men  of  means  could  control  the  petroleum  business  of  the 
United  States.  With  this  end  in  view  he  approached  che 
managers  of  the  New  York  Central,  the  Erie  and  the 
Pennsylvania  Central  railroad  companies,  and  on  January 
18,  1872,  entered  with  them  into  a  secret  compact  by 
which  the}^  agreed  to  cooperate  with  the  South  Improve- 
ment Company  (an  organization  formed  by  that  gentleman 
to  aid  in  the  accomplishment  of  his  designs)  to  grant  to 
said  companies  certain  rebates  and  to  secure  it  against 
loss  or  injury  by  competition.  The  South  Improvement 
Company,  in  consideration  of  these  favors,  guaranteed  to 
the  railroad  companies  a  fair  division  of  its  freights.  The 
existence  of  this  contract  soon  became  known  and  caused 
a  violent  protest  among  the  oil-producers.      An  indigna- 


Monopoly  In   Transportation.  115 

tion  meeting  was  held  and  a  committee  was  appointed  to 
wait  on  the  raih'oad  managers  and  demand  fair  treatment 
for  all. 

The  railroad  companies  j'ielded  and  promised  to  give 
equal  rates  to  all  shippers  and  to  grant  to  no  person 
either  rebates  or  any  other  advantage  whatever.  New 
rates  were  fixed  for  the  transportation  of  both  crude  and 
refined  oil,  and  it  was  agreed  on  the  part  of  the  railroad 
companies  that  at  least  ninety  days'  notice  should  be  given 
of  any  change  that  might  be  made  in  the  rates.  Steps 
were  also  taken  to  have  the  charter  of  the  South  Improve- 
ment Compan}'  canceled  because  it  had  been  found  that  it 
was  neither  the  owner  of  a  refinery  nor  of  an  oil  well,  and 
could  therefore  not  comply  with  the  legal  requirements 
concerning  the  organization  of  stock  companies.  While 
the  South  Improvement  Compan}^  thus  came  to  a  sudden 
and  rather  inglorious  end,  its  founders  soon  contrived 
other  means  to  carry  out  their  ingenious  plans.  They 
bought  a  refinery,  reorganized  by  taking  the  prepossessing 
title  of  Standard  Oil  Company,  and  were  now  pr/epared  to 
resume  their  operations  under  the  guise  of  legal  authority. 

The  railroad  companies  seemed  to  have  relished  their 
novel  business  connections,  for.  without  paying  the  least 
attention  to  the  agreement  into  which  they  had  entered 
with  the  other  producers  and  refiners  of  oU,  they  extended 
the  privileges  of  the  defunct  South  Improvemen,t  Com- 
pan}^ to  its  successors.  The  new  company  received  secret 
rebates  ranging  from  50  cents  to  $1.32  per  barrel.  The 
agreement  also  contained  the  stipulation  that  if  lower 
rates  should  ever  be  granted  to  their  competitors,  an 
additional  rebate  should  be  given  to  the  Standard  Oil 
Company.  Endowed  with  these  privileges,  the  favored 
company  proceeded  to  unite  under  its  banner,  by  consoli- 


116  The  Railroad   Question. 


elation,  purchase  or  lease,  the  leading  refineries  of  Cleve- 
land. 

The  effect  of  the  discriminations  practiced  against  inde- 
pendent refineries  soon  became  apparent.  In  less  than 
two  years  there  were  closed  in  Pittsburgh  twenty-one 
refineries,  that  represented  an  aggregate  capital  of 
$2,000,000  and  had  given  employment  to  over  3,000 
people.  A  large  number  of  the  remaining  refineries  were 
forced  to  consolidate  with  the  Standard  Oil  Company. 

The  next  step  toward  the  entire  suppression  of  compe- 
tition was  an  attack  planned  against  the  independent  pipe 
lines.  The  Standard  had  early  secured  control  of  the 
United  Pipe  Line.  To  exterminate  competing  lines,  they 
again  appealed  to  the  railroad  companies,  and  on  the  9th 
day  of  September,  1874,  J.  H.  Rutter,  general  freight 
agent  of  the  New  York  Central,  issued  a  new  oil  tariff 
which  discriminated  greatly  in  favor  of  the  oil  brought  by 
the  United  Pipe  Line  to  the  refineries.  Up  to  that  time 
this  company  had  done  from  25  to  30  per  cent,  of  the 
total  business  of  the  various  pipe  lines.  Within  one  year 
after  the  adoption  of  the  new  tariff  it  did  fully  80  per 
cent,  of  the  entire  business.  This  forced  the  independent 
lines  either  to  sell  out  to  the  Standard  or  to  suspend  busi- 
ness, for  the  latter's  rebate  was  larger  than  their  toll. 
The  oil  tariff  of*  the  Pennsylvania  Central  compelled  the 
independent  Pittsburgh  refiners  to  ship  their  refined  oil 
over  that  company's  line,  if  they  would  avail  themselves 
of  the  rebate  which  it  granted  on  the  rates  for  the  trans- 
portation of  crude  oil  to  Pittsburgh.  The  evident  pur- 
pose and  the  effect  of  such  a  tariff  was  to  prohibit  oi] 
shipments  over  the  Baltimore  and  Ohio.  Had  this  road 
made  ever  so  reasonable  a  tariff,  the  combined  charges 
for  the  transportation  of  the  crude  petroleum  from  the  oil 


Monopoly  in   Transportation.  117 

regions  to  Pittsburgh  by  the  Pennsylvania  Central,  and 
for  that  of  the  refined  oil  to  the  sea  coast  by  the  Balti- 
more and  Ohio,  would  still  have  been  prohibitive  in  coin- 
petition  with  the  special  transit  rates  granted  to  the 
Standard  Oil  Compan}'.  As  a  remedy  it  was  proposed  to 
organize  a  new  pipe  line,  it  being  believed  that  the  crude 
oil  could  be  brought  to  Pittsljurgh  by  that  line,  refined 
there,  shipped  to  the  seaboard  by  the  Baltimore  and 
Ohio,  and  sold  there  at  as  good  or  even  a  better  profit 
than  the  product  of  the  Standard,  notwithstanding  the 
favors  received  by-  the  latter  from  the  allied  trunk  lines. 
This  movement  resulted  in  the  creation  of  the  Columbia 
Conduit  Compan}',  which  at  once  proceeded  to  Isij  its 
pipes  from  the  oil  wells  to  Pittsburgh.  Under  the  laws 
of  the  State  of  Pennsylvania  it  became  necessary  for  this 
company  to  obtain  the  permission  of  property-holders  to 
lay  the  pipes  through  their  lands.  Consent  was  every- 
where readily  given,  and  the  pipes  were  laid  without 
hindrance  until  the  track  of  the  Pennsylvania  Railroad 
was  reached,  within  a  few  miles  of  the  Pittsburgh  refin- 
eries. This  company  peremptorily  refused  to  let  the 
pipes  be  laid  under  its  track.  The  pipe  line  compan}^ 
^fter  some  delay  contrived  a  way  to  obviate  the  diflSculty. 
It  laid  its  pipes  on  each  side  of  the  road  as  close  to  the 
track  as  it  could  without  trespassing  against  the  legal 
rights  of  the  Pennsylvania  Central,  and  then  convej'ed  the 
oil  from  one  side  of  the  track  to  the  other  by  means  of 
large  oil  tanks  on  wheels,  which  could  not  be  prevented 
from  passing  over  the  railroad  track  at  the  public  crossing. 
After  several  months  the  railroad  company  allowed  the 
pipes  to  be  laid  under  its  track,  but  it  soon  appeared  that 
another  combination  had  been  efl'ected  to  destroy  the  value 
of  this  concession.      A  railroad  war  kad  given  the  three 


118  The  Railroad  Question. 

trunk  lines  an  opportunity  to  force  the  Baltimore  and  Ohio 
into  the  pool.  A  uniform  rate  of  $1.15  was  established 
for  shipments  of  refined  petroleum  from  any  point  to  the 
seaboard.  While  this  was  in  itself  an  unjust  discrimina- 
tion against  Pittsburgh,  which  is  250  miles  nearer  tide- 
water than  Cleveland,  the  railroads  in  addition  granted 
the  Standard  secret  rebates  which  enabled  it  to  sell  its 
oil  on  the  coast  for  less  than  the  sum  of  its  first  cost  at 
the  refineries  and  the  open  rate  of  transportation  to  the 
points  of  export.  The  independent  refiners  of  Pittsburgh 
found  themselves  again  cut  ofT  from  the  market,  but 
necessity  soon  made  them  discover  another  outlet.  Ship- 
ping their  oil  down  the  Ohio  River  to  Huntington,  "W.  Va. , 
they  had  it  taken  b}''  the  Chesapeake  and  Ohio  Railroad  to 
Richmond.  In  spite  of  the  fact  that  this  route  was  more 
than  twice  as  long  as  the  direct  line  from  Pittsburgh  to 
the  seaboard,  and  in  spite  of  the  further  fact  that  it 
necessitated  an  expensive  transfer,  a  rate  equal  to  about 
two-thirds  of  the  trunk  line  rate  for  the  direct  shipment 
proved  remunerative  to  the  Chesapeake  and  Ohio.  The 
independent  refiners  kept  up  their  competition  for  some 
time,  but  the  great  disadvantage  of  river  travel  and  the 
insufficient  export  facilities  of  Richmond  finally  forced 
them  to  give  up  the  contest. 

Until  the  year  1877  the  Standard  Oil  Company  had 
worked  hand  in  hand  with  the  railroads.  It  had  obtained 
all  its  privileges  by  asking  for  them  and  by  holding  out 
inducements  to  railroad  managers  to  grant  them.  It  now 
commenced  to  dictate  terms  to  refractory  railroad  com- 
panies. 

The  Pennsylvania  road  ventured  to  carry  oil  not  the 
property  of  the  Standard  on  terms  which  that  company 
did  not  approve.     The  latter  ordered  the  road  to  refuse  to 


MiiiKipoli/  ill    Tidiisportidlon  .  119 

carrj^  the  product  of  their  competitors.  This  the  railroad 
company  declined  to  do,  and  the  Standard  at  once  with- 
drew its  custom.  The  Pennsj'lvania  retaliated  by  carrying 
the  oil  of  the  independent  refineries  at  merely  nominal 
rates  and  even  went  so  far  as  to  make  its  rates  dependent 
upon  the  profits  realized  by  the  shippers.  A  fierce  freight 
war  was  thus  precipitated,,  in  which  the  Erie  and  New 
York  Central  supported  the  Standard  Company.  The 
Pennsylvania  road  was  soon  forced  to  surrender  and  sign 
an  ignominious  treaty. 

The  Baltimore  and  Ohio,  which  had  again  commenced 
to  carry  the  product  of  those  Pittsburgh  refineries  which 
received  their  crude  oil  through  the  Columbia  Conduit 
Company,  was  in  a  similar  manner  forced  to  reject  their 
freights.  The  pipe  line,  whose  value  was  thus  almost 
entirel}^  destroyed,  was  soon  after  sold  to  the  vStandard 
Oil  Company.  This  company  had  now  an  almost  com- 
plete monopoly  of  the  oil  business  of  the  United  States, 
and  still  it  was  not  satisfied.  It  appears  that  some  of  the 
producers  of  crude  oil  had  been  in  the  habit  of  shipping  a 
part  of  their  product  in  spite  of  the  advantages  which  the 
Standard  had  through  its  rebates.  To  prevent  even  these 
shipments,  or  rather  to  exact  another  tribute  from  rail- 
road stockholders,  the  American  Transfer  Company,  one 
of  the  auxiliaries  of  the  Standard  Oil  Trust,  in  1878, 
demanded  and  received  from  the  Pennsylvania  road  a 
"  commission  "  of  20  cents  a  barrel  on  all  shipments  of 
petroleum  made  hy  anij  shipper.  It  had  been  shown  to 
the  satisfaction  of  the  Pennsjivauia  Railroad  Company 
that  similar  commissions,  ranging  from  20  to  35  cents  a 
barrel,  were  being  paid  by  the  New  York  Central  and  Erie 
roads. 

When,  in  1879,  an  effort  was  made  to  establish  a  pipe 


120  The  Railroad  Question. 


line  from  the  oil  regions  to  tlie  seaboard,  nothing  was 
left  undone  by  the  trunk  lines  to  thwart  the  enterprise. 
The  new  company  finally  succeeded  in  making  connection 
with  a  railway  which  had  no  part  in  the  pool,  and  there 
was  some  hope  that  under  this  arrangement  competition 
might  at  least  be  maintained  at  some  points.  The  Stan- 
dard Company  again  appealed  to  the  trunk  lines  to  pro- 
tect it  against  injury  by  competition  and  obtained  from 
them  a  special  rate  of  20  cents  per  barrel,  which  rate  was 
even  reduced  to  15  cents  per  barrel  two  months  later. 
Against  such  a  rate  it  was  impossible  to  compete,  and 
after  a  short  struggle  the  new  line  found  itself  compelled 
to  sell  its  works  to  the  Standard. 

To  crown  its  monopoly,  the  Standard  Oil  Company 
finally  bought  of  the  New  York  Central  and  Erie  roads 
their  terminal  facilities  for  the  transportation  of  oil,  and 
thereby  made  it  virtually  impossible  for  them  to  transport 
oil  for  any  of  its  few  remaining  competitors.  Mr.  Josiah 
Lombard,  part  owner  of  the  New  York  refinery,  stated  in 
1879  before  the  investigating  committee  of  the  legislature 
of  New  York  that  in  1878  he  had  requested  the  Erie 
Company  to  transport  for  him  100  cars  of  crude  oil  from 
Carrollton  to  New  York;  that  he  had  called  upon  Mr. 
V-ilas,  the  general  freight  agent  of  the  company,  in  person, 
but  had  never  been  able  to  obtain  the  cars,  though  the  oil 
had  been  held  in  Carrollton  three  or  four  months  ready  to 
be  loaded.  This  gentleman  also  testified  that  he  had  found 
it  impossible  to  obtain  cars  from  the  New  York  Central, 
and  that  the  company's  general  freight  agent  had  informed 
him  that  the  road  did  not  own  and  could  not  furnish  any 
oil  cars. 

After  the  Standard  Oil  Company  had  secured  control 
of  the  various  pipe  lines  of  the  oil  regions,  it  frequently 


Monopoly  in  Transjjortation.  121 

lowered  the  price  of  crude  oil  to  such  an  extent  as  to 
make  its  pl-oduction  unprofitable.  It  even  refused  to  bu}' 
oil,  basing  its  refusal  upon  the  ground  that  the  railroad 
companies  failed  to  furnish  cars  for  its  transportation. 
When  the  well-owners  had  their  tanks  filled,  they  had  the 
choice  to  let  the  oil  run  away  or  to  be  at  the  expense  of 
closing  up  their  wells.  In  one  instance,  however,  when 
their  ruse  threatened  to  cause  a  riot,  several  hundred  cars 
were  brought  to  the  wells  within  a  few  hours. 

The  Standard  Oil  Trust,  not  satisfied  with  the  monopoly 
of  the  wholesale  trade,  even  tried  in  places  to  control  the 
retail  trade  by  peddling  oil  at  private  houses.  This 
method  of  destroying  competition  was  chiefly  resorted  to 
where  Independent  dealers  obtained  their  supply  by  a 
water  route. 

That  many  of  the  deeds  of  the  Standard  are  dark  is 
evident  from  the  fact  that  its  members,  when  summoned 
by  the  Hepburn  committee,  declined  to  testify,  lest  their 
testimony  be  used  to  convict  them  of  crime.  Officials  of 
the  trust  have  bribed  or  attempted  to  bribe  employes  of 
rival  firms,  for  the  purpose  of  ruining  their  business.  By 
its  peculiar  methods  the  company  has  been  successful  in 
courts  of  justice  and  legislative  halls,  and  has  enjo^'ed  an 
impunity  for  its  conspiracy  against  the  public  that  is 
without  precedent  in  America.  It  has  accumulated  a  cap- 
ital of  more  than  $100,000, 000,  and  it  is  even  claimed  that 
for  years  its  annual  dividends  have  exceeded  in  amount 
the  capital  actually  invested.  This  is  not  at  all  strange 
when  it  is  considered  that  they  have  levied  upon  the  pro- 
ducers, consumers  and  transporters  alike.  Mr.  Cassat 
testified  before  the  New  York  investigating  committee 
that  in  eighteen  months  the  railroads  had  paid  the 
Standard  in  rebates  no  less  than  $10,000,000.     And  the 


122  The  Railroad  Question. 

vei-y  payment  of  these  enormous  rebates  enabled  the 
Standard  to  decrease  the  price  of  oil  to  the  producer  and 
to  increase  it  to  the  consumer. 

It  is  claimed  by  the  defenders  of  the  Standard  monop- 
oly that  under  the  trust  the  price  of  petroleum  has  been 
constantly  decreased  to  the  consumer.  That  the  price  of 
kerosene  is  lower  now  than  it  was  fifteen  years  ago  is 
undoubtedly  true,  but  the  reductions  were  brought  about 
not  by  the  trust,  but  in  spite  of  the  trust.  The  price  now 
maintained  is  an  unnatural  one.  The  Standard  Oil  Com- 
pany never  lowered  the  price  of  its  oil  except  when  com- 
pelled to  do  so  by  competition.  The  largely  increased 
output  of  crude  oil,  the  improved  methods  of  refining,  the 
greatly  lowered  cost  of  transportation  would  have  lowered 
the  price  of  coal  oil  without  the  philanthropy  of  the 
Standard  Oil  Company.  Iron,  steel,  calico,  woolen  goods 
and  a  thousand  other  commodities  have  within  almost  the 
same  period  suffered  much  larger  reductions  than  coal 
oil.  But  even  if  the  Standard  monopoly  had  voluntarily 
lowered  the  price  of  its  products,  the  American  people 
could  never  approve  of  its  methods.  They  can  never  be 
made  to  believe  that  the  end  sanctifies  the  means, 
especially  when  those  means  are  railroad  favors,  secret 
combinations,  bribery,  intimidation  and  lawless  arrogance. 

Many  other  interesting  cases  might  be  given.  The 
Southern  Pacific  Railway  Company,  for  instance,  owns 
nearly  all  of  the  railways  of  California,  and  enjoys  at  the 
present  time  almost  a  complete  monopoly  of  the  transpor- 
tation business  of  that  State  and  much  more  of  the  Pacific 
Coast.  Perhaps  no  set  of  managers  would  be  more  con- 
siderate of  the  people's  rights  in  the  absence  of  legal 
restraint  than  those  in  charge  of  this  company,  yet  there 
is  not  a  business  man  on  th ,    Pacific  Coast  who  comes  in 


MonopoJ))  ill   Tran.^portdtion.  123 

contact  with  this  company  who  does  not  realize  and  feel 
the  power  of  its  iron  hand,  unless  it  be  those  who  for 
various  reasons  are  recipients  of  its  special  favors.  It  has 
become  notorious  that  the  legislature,  Board  of  Kailroad 
Commissioners  and  some  of  the  judges  of  the  courts  of 
that  State  are  as  servile  to  the  demands  of  this  railway 
company  as  are  its  own  employes. 

The  railway  company  is  a  closely  organized  body  of 
shrewd,  active  men,  while  those  who  furnish  business  for 
it  are  not  organized,  and  they  will  never  be  able  to  prop- 
erly protect  their  own  interests  until  they  control  the 
machinery  of  their  State  government. 


CHAPTER  V. 


RAILROAD    ABUSES. 


AS  has  already  been  shown,  railroad  enterprise  met 
with  comparative!}'  little  opposition  in  the  United 
States,  for,  as  compared  with  the  interests  certain  to  be 
benefited  by  the  introduction  of  the  new  mode  of  trans- 
portation, those  likely  to  be  injured  by  it  were  insignifi- 
cant. It  is  true,  the  innate  conservatism  of  man  even 
here  recorded  its  objections  to  the  innovation.  It  viewed 
with  distrust  the  new  power  which  threatened  to  revolu- 
tionize well-established  systems  of  transportation  and 
time-honored  customs  and  to  force  upon  the  people  eco- 
nomic factors  the  exact  nature  and  value  of  which  could 
only  be  ascertained  by  practical  tests.  But  the  progres- 
sive portion  of  the  community  was  so  decidedly  predomi- 
nant that  these  protests  were  soon  drowned  in  the  general 
demand  for  improved  facilities  of  transportation.  ^The 
farmer  who  had  to  haul  his  produce  a  great  distance  to 
reach  a  market  appreciated  the  advantages  to  be  derived 
from  the  location  of  a  railroad  station  nearer  home.  The 
manufacturer  who  heretofore  had,  had  a  very  limited  terri- 
tory for  the  sale  of  his  products  well  realized  that  he  could 
with  the  aid  of  a  railroad  enlarge  his  territory  and  increase 
his  output,  and  with  it  his  profits.  The  pioneer  merchant 
found  that  he  could  no  longer  compete  with  former  rivals 
in  adjoining  towns,  since  the  iron  horse  had  reached  them 
and  lowered  their  freights,  and  he  also  became  a  convert 
to  the  new  order  of  things  and  clamored  loud  for  railroad 
facilities.     Railroads  seemed  the  panacea  for  industrial 

134 


IxiiUrodd  Ahitscs.  125 


and  commercial  ills,  and  every  inducement  was  held  out 
and  every  sacrifice  made  by  communities  to  become  parti- 
cipants of  their  blessings.  So  great  was  the  estimate  of 
the  conveniences  afforded  by  them  and  so  strongly  was 
public  opinion  prejudiced  in  their  favor  that  it  is  no  exag- 
geration to  say  that  railroad  companies  as  a  rule  were 
permitted  to  prepare  their  own  charters,  and  that  these 
charters  almost  invariably  received  legislative  sanction.) 

To  such  an  extent  was  the  public  mind  prepossessed  in 
favor  of  railroads  that  an}'  legislator  who  would  have  been 
instrumental  in  delaying  the  granting  of  a  railroad  charter 
for  the  purpose  of  perfecting  it,  to  protect  the  people 
against  possible  abuses,  would  have  been  denounced  as  a 
short-sighted  stickler  and  obstructor  of  public  improve- 
ments. Anxious  for  railroad  facilities,  the  people  were 
deaf  to  the  warnings  of  history.  Their  liberality  knew  no 
bounds.  National,  State  and  county  aid  was  freel}'^ 
extended  to  new  railroad  enterprises.  Communities  taxed 
themselves  heavily  for  their  benefit,  and  municipalities 
and  individuals  ^ed  with  each  other  in  donating  mone}', 
rights  of  way  and  station  buildings.  This  was  especially 
true  of  the  West,  whose  undeveloped  resources  had  most 
to  gain  by  railroad  extension.  So  large  were  the  public 
and  private  donations  in  several  of  the  "Western  States 
that  their  value  was  equal  to  one- fifth  of  the  total  cost  of 
all  the  roads  constructed.  To  still  more  encourage  pro- 
moters of  railroad  enterprises,  general  incorporation  laws 
were  passed  whteh  permitted  companies  to  be  formed 
and  roads  to  be  built  practically  without  State  supervision. 
/in  their  admiration  for  the  bright  side  of  the  picture,  the 
people  entirely  overlooked  the  shad}'  side. 

Besides  this,  there  was  virtually  an  absence  of  all  law 
regulating  the  operation  of  railroads.     It  was,  under  these 


126  IVie  Railroad  Question. 

circumstances,  not  strange  that  abuses  early  crept  into 
railroad  management  which,  long  tolerated  by  the  people 
and  unchecked  and  even  encouraged  by  public  officers, 
finally  assumed  such  proportions  as  to  threaten  the  very 
foundation  of  free  government.  ^  Great  discoveries  that 
add  rapidlj'  to  the  wealth  of  a  country  tend  to  overthrow  a 
settled  condition  of  things,  and  organized  capital  and 
power,  if  not  restrained  by  wholesome  laws  and  public 
watchfulness,  will  ever  take  ad\'antage  of  the  unorganized 
masses.  The  people  of  those  regions  which  the  railroad 
stimulus  had  caused  to  be  settled  thrived  for  years  so 
well  upon  a  virgin  soil  that  they  gladly  divided  their  sur- 
plus with  the  railroad  companies.  They  looked  upon  the 
railroads  as  the  source  of  their  prosperity  and  upon  rail- 
road managers  as  high-minded  philanthropists  and  public 
benefactors,  with  whom  to  quarrel  would  be  an  act  of 
sordid  ingratitude,  and  they  paid  but  little  attention  to 
the  means  emplo3^ed  by  them  to  exact  an  undue  share  of 
their  earnings.  Railroad  men  did  whatever  they  could  to 
foster  through  their  emissaries  this  misplaced  adoration. 
They  posed  before  the  public  as  the  rightful  heirs  of 
the  laurels  of  Watt  and  Stephenson,  insisting  that  their 
genius,  capital  and  enterprise  had  built  up  vast  cities  and 
opened  for  settlement  and  civilization  the  boundless 
prairies  of  the  West.  These  claims  have  been  persistently 
repeated  by  railroad  men,  though  they  are  so  preposterous 
that  they  scarcely  deserve  refutation.  The  railroad,  grad- 
ually developed  by  active  minds  of  the  past,  and  greatl}^ 
improved  by  the  inventions  of  hundreds  of  men  in  the 
humbler  w>alks  of  life,  is  the  common  inheritance  of  all 
mankind,  though  no  class  of  people  have  derived  greater 
Ijenefits  from  it  than  railroad  constructors,  managers  and 
manipulators.     Railroad  managers  are  no  more  entitled  to 


Railroad  Ahuaes.  127 


the  special  gratitude  of  the  public  for  dispensing  railroad 
transportation  at  much  more  than  remunerative  rates  than 
is  the  Western  Union  monopoly  for  maintaining  among  us 
an  expensive  and  inefficient  telegraph  service.  No  one 
believes  that  the  disbanding  of  the  W'^stern  Union  would 
leave  us  long  without  telegraphic  communication.  In  like 
manner  railroads  will  be  built  whenever  and  wherever  they 
promise  to  be  profitable.  If  one  company  does  not  take 
advantage  of  the  opportunities  offered,  another  will.  JTliat 
large  cities  have  been  built  up  by  the  railroads  is  true,  but 
it  is  equally  true  that  these  cities  b}'  their  commerce  and 
manufactures  administer  to  the  prosperitj'  of  the  railroads 
as  much  as  the  railroads  administer  to  theirs.  Commer- 
cial centers  in  days  gone  by  existed  without  railroads,  but 
railroads  could  not  long  exist  without  the  stimulating- 
influence  of  these  busy  marts  of  trade.  The  same  argu- 
ment applies  with  still  greater  force  to  the  agricultural 
sections  of  our  country,  especially  the  great  Northwest. 
The  dry-goods  merchant  might  as  well  boast  of  having 
clad  the  public  as  the  railroad  manager  of  having  built  up 
farming  communities  by  selling  to  them  transportation. 

And  yet  the  American  people  have  never  ceased  to  be 
mindful  of  the  conveniences  afforded  to  them  by  this 
modern  mode  of  transportation.  On  the  contrary,  they 
have  been  but  too  prone  to  credit  railroad  men  with  being 
benefactors,  when  they  were  but  beneficiaries,  and  this 
llberalit}^  of  spirit  made  them  overlook,  or  at  least  tolerate, 
the  abuses  which  grew  proportionately  with  the  wealth 
and  power  of  the  companies. 

The  first  railroad  acts  of  England  had  contemplated  to 
make  the  roads  highways,  like  turnpikes  and  canals. 
These  roads  were  established  bj'  the  power  of  eminent 
domain.      Companies  were  empowered  to  build  and  main- 


128  The   R<  til  road    Question. 

tain  them  and  to  reimburse  themselves  by  the  collection 
of  fixed  tolls.  Had  the  owners  of  the  roads  from  the 
beginning  been  deprived  of  the  privilege  of  becoming  car- 
riers over  their  own  lines,  the  system  might  have  so 
adjusted  itself  as  to  become  entirely  practicable;  but  as 
they  were  allowed  to  compete  with  other  cariiers  in  the 
transportation  of  passengers  and  merchandise,  they  were 
soon  able  to  demonstrate,  at  least  to  the  satisfaction  of 
Parliament,  that  the  use  of  the  track  by  different  carriers 
was  impracticable  and  unsafe.  A  number  of  circum- 
stances combined  to  aid  the  railroad  companies  in  their 
efforts  to  monopolize  the  trade  on  their  lines.  In  the  first 
place,  when  the  early  railroad  charters  were  granted,  but 
few  persons  had  any  conception  of  the  enormous  growth 
of  commerce  which  was  destined  to  follow  everywhere  the 
introduction  of  railways.  The  tolls  as  fixed  in  the  charters 
soon  yielded  an  income  out  of  proportion  to  the  cost  of 
th£  construction  and  maintenance  of  the  roads.  Their 
large  margins  of  profit  enabled  the  owners  of  the  roads  to 
transport  goods  at  lower  rates  than  other  carriers  and  to 
thus  compel  the  latter  to  abandon  their  business.  Another 
defect  of  the  original  charters  worked  greatly  to  the  dis- 
advantage of  independent  carriers.  They  contained  no 
provision  as  to  the  use  of  terminal  facilities.  The  railroad 
companies  claimed  that  these  facilities  were  not  affected 
by  the  public  franchise  and  were  therefore  their  personal 
property.  This  placed  independent  carriers  at  a  great 
disadvantage  and  made  in  itself  competition  on  a  large 
scale  impossible.  These  carriers  were  thus  at  the  mercy 
of  the  railroad  companies  for  the  transportation  of  their 
cars,  and  the  companies  never  permitted  their  business  to 
become  lucrative  enough  to  induce  many  to  engage  in  it. 
It  soon  became  apparent  that  under  the  charters  granted 


Railroad  Abuses.  129 


to  the  railroad  companies  such  competition  as  existed  on 
turnpikes  and  canals  was  out  of  the  question  on  their 
roads.  In  England  the  great  abundance  of  water-waj's 
exercised  for  many  years  a  wholesome  control  over  the 
rates  of  railway  companies,  until  these  companies,  greatl}' 
annoyed  by  such  restraint,  absorbed  many  of  the  larger 
canals  by  purchase  and  made  them  tributary  to  their 
systems.  These  companies  have  also  acquired  complete 
control  over  many  important  harbors. 

In  the  United  States  the  people  depended  from  the 
beginning  of  the  railroad  era  on  free  competition  for  the 
regulation  of  railroad  charges.  This  desire  to  maintain 
free  competition  led  to  the  adoption  of  general  incorpora- 
tion acts,  it  being  quite  generally  believed  that  such  com- 
petition as  obtains  between  merchants,  manufacturers  and 
mechanics  was  possible  among  railroads  and  would,  when 
allowed  to  be  operative,  regulate  prices  and  prevent  abuses. 
The  remedy  was  applied  freely  throughout  the  country, 
but  for  once  it  did  not  prove  successful.  Stephenson's 
saying,  that  where  combination  was  possible  competition 
was  impossible,  was  here  fully  verified.  The  great 
ingenuity  of  the  class  of  men  usually  engaged  in  railroad 
enterprises  succeeded  in  thwarting  this  policy  of  commer- 
cial freedom.  The  opportunities  for  those  in  control  of 
railroads  to  operate  them  in  their  own  interest,  regardless 
of  the  interests  of  their  patrons  or  stockholders,  were  so 
great  that  men  of  a  speculative  turn  of  mind  were 
attracted  to  this  business,  which  indeed  soon  proved  a 
most  productive  field  for  them.  One  road  after  another 
fell  into  the  control  of  men  who  had  learned  rapidly  the 
methods  employed  to  make  large  fortunes  in  a  short  time.  I 

As  the  roads  multiplied,  transportation  abuses  increased. 
A  considerable  number  of  people  early  favored  State  con- 


130  The   RaUnxul    Question. 

trol  of  railroads  as  the  best  means  of  regulating  transpor- 
tation, but  a  majority  looked  upon  the  existing  abuses 
as  being  merely  incidental  to  the  formative  period,  and 
hoped  that  with  a  greater  expansion  of  the  railroad  sj'stem 
they  would  correct  themselves.  And  this  doctrine  was 
industriously  disseminated  by  railroad  managers  and  their 
allies.  They  lost  no  opportunity  to  impress  upon  the 
people  that  State  regulation  was  an  undue  interference 
with  private  business  and  that  such  a  policy  would  soon 
react  against  those  who  hoped  to  profit  by  it,  inasmuch  as 
it  would  prevent  the  building  of  new  roads  and  would 
thus  hinder,  rather  than  aid,  in  bringing  about  the  right 
solution  of  the  railway  question,  viz. ,  regulation  by  com- 
petition. Tliey  contended,  in  short,  that  State  regulation 
would  be  destructive  to  railroads  as  well  as  to  every  other 
class  of  property. 

Railroad  sophistr}'  for  man}-  years  succeeded  in  pre- 
A'onting  the  masses  from  realizing  that  an  increased  sup- 
ply of  transportation  does  not  necessarily  lower  its  price, 
or,  in  other  words,  that  railroad  abuses  do  not  necessarily 
correct  themselves  through  the  influence  of  competition. 
A  large  capital  is  required  to  build  and  maintain  a  rail- 
road, which  must  necessarily  be  managed  by  a  few  per- 
sons. Besides  this,  the  construction  of  a  railroad  practi- 
cally banishes  at  once  from  its  field  all  other  means  of 
land  transportation,  l^he  railroad  has  thus  a  pi'actica/ 
monopoly  within  its  territory,  and  its  managers,  if  left  to 
follow  their  instinct,  will  despotically  control  all  the  busi- 
ness trilnitary  to  it,  with  unlimited  power  to  build  up  and 
tear  down,  to  punish  its  enemies  and  to  reward  its  friends. 

It  is  not  true  that  State  control  checks  railroad  building.'* 
While  it  may  prevent  the  construction  of  useless  lines  and 
discourage  speculation,  it  will  encourage  the  building  of 


Hail  load  Abimes.  131 


roads  for  which  there  is  a  legitimate  demaiul.  Stock- 
holders as  a  whole  do  not  participate  in  the  management 
of  the  roads  and  do  not  profit  l3y  railroad  abuses,  the 
origin  of  which  may  almost  invariably  be  traced  to  selfish 
designs  on  the  part  of  a  few  entrusted  with  the  manage- 
ment of  the  property.  Where  through  wise  legislation 
these  abuses  are  prevented,  the  roads  are  managed  in  the 
interest  of  all  the  stockholders,  develop  business  and  enjoy 
lasting  prosperity. 

It  may  be  laid  down  as  a  general  rule  that  the  policy 
which  best  subserves  the  interests  of  the  patrons  of  a  road 
is  always  the  best  policy  for  its  owners.  Injustice  to  a 
railroad  will  interfere  with  its  usefulness;  injustice  to 
shippers  depresses  production  and  consumption ;  and  in 
either  case  both  the  road  and  its  patrons  will  suffer. 
State  control  is  therefore  as  much  needed  in  the  interest 
of  the  owners  of  railroads  as  in  the  interest  of  their 
patrons.  What  should  be  the  nature  of  such  control  will 
be  discussed  hereafter.  A  full  understanding  of  the 
question  at  issue,  however,  makes  necessary  an  inquir}- 
into  tlie  various  abuses  which  unrestrained  railroad  man- 
agement of  the  past  has  developed.  Perhaps  no  better 
presentation  of  the  evils  and  abuses  of  railroads  and  their 
consequences  can  be  found  than  that  contained  in  the 
report  of  the  Senate  Committee  on  Interstate  Commerce, 
submitted  by  Senator  Cullom,  in  1886.  This  report 
charges :  J 

1.  That  local  rates  are  unreasonabl}^  high,  as  compared 
with  through  rates. 

2.  That  local  and  through  rates  are  unreasonably  high 
at  non-competing  points,  either  from  the  absence  of  coni" 
petition  or  in  consequence  of  pooling  agreements  thaj 
restrict  its  operation,  j 


132  Tlie  Railroad  Question. 


3.  That  rates  are  established  witliout  apparent  regard 
to  the  actual  cost  of  the  service  performed,  and  are  based 
largely  on  ' '  what  the  traffic  will  bear. " 

4.  That  unjustifiable  discriminations  are  constantly 
made  between  individuals  in  the  rates  charged  for  like 
service  under  similar  circumstances. 

5.  That  improper  discriminations  are  constantly  made 
between  articles  of  freight  and  branches  of  business  of  a 
like  character,  and  between  different  quantities  of  the 
same  class  of  freight. 

6.  That  unreasonable  discriminations  are  made  between 
localities  similarly  situated. 

7.  That  the  effect  of  the  prevailing  policy  of  railroad 
management  is,  by  an  elaborate  system  of  secret  special 
rates,  rebates,  drawbacks  and  concessions,  to  foster  mon- 
opoly, to  enrich  favored  shippers,  and  to  prevent  free 
competition  in  many  lines  of  trade  in  which  the  item  of 
transportation  is  an  important  factor. 

8.  That  such  favoritism  and  secrecy  introduce  an  ele- 
ment of  uncertainty  into  legitimate  business  that  greatly 
retards  the  development  of  our  industries  and  commerce. 

9.  That  the  secret  cutting  of  rates  and  the  sudden 
fluctuations  that  constantly  take  place  are  demoralizing  to 
all  business  except  that  of  a  purely  speculative  character, 
and  frequently  occasion  great  injustice  and  heavy  losses. 

10.  That,  in  the  absence  of  national  and  uniform  legis- 
lation, the  railroads  are  able  by  various  devices  to  avoid 
their  responsibility  as  carriers,  especially  on  shipments 
over  more  than  one  road,  or  from  one  State  to  another, 
and  that  shippers  find  great  difficulty  in  recovering  dam- 
ages for  the  loss  of  property  or  for  injury  therefor. 

11.  That  railroads  refuse  to  be  bound  by  their  own 
contracts,  and  arbitrarily  collect  large  sums  in  the  shape 


Rdilroaif  Abuses.  133 


of  overcharges  in  addition  to  the  rates  agreed  upon  at  the 
time  of  shipment. 

12.  That  railroads  often  I'efuse  to  recognize  or  to  be 
responsible  for  the  acts  of  dishonest  agents  acting  under 
their  authority. 

13.  That  the  common  law  fails  to  afford  a  remedy  for 
such  grievances,  and  that  in  cases  of  dispute  the  shipper 
is  compelled  to  submit  to  the  decision  of  the  railroad 
manager  or  pool  commissioner,  or  run  the  risk  of  incur- 
ring further  losses  by  greater  discriminations. 

14.  That  the  differences,  in  the  classifications  in  use  in 
various  parts  of  the  country,  and  sometimes  for  shipments 
over  the  same  roads  in  different  directions,  are  a  fruitful 
source  of  misunderstandings,  and  are  often  made  a 
means  of  extortion. 

15.  That  a  privileged  class  is  created  by  the  granting 
of  passes,  and  that  the  cost  of  the  passenger  service  is 
largely  increased  by  the  extent  of  this  abuse. 

16.  That  the  capitalization  and  bonded  indebtedness 
of  the  roads  largely  exceed  the  actual  cost  of  their  con- 
struction or  their  present  value,  and  that  unreasonable 
rates  are  charged  in  the  effort  to  pay  dividends  on  watered 
stock  and  interest  on  bonds  improperly  issued. 

17.  That  railroad  corporations  have  improperly  engaged 
in  lines  of  business  entirely  distinct  from  that  of  trans- 
portation, and  that  undue  advantages  have  been  afforded 
to  business  enterprises  where  railroad  officials  were  inter- 
ested. 

18.  That  the  management  of  the  railroad  business  is 
extravagant  and  wasteful,  and  that  a  needless  tax  is  im- 
posed upon  the  shipping  and  traveling  public  by  the  neces- 
sary expenditure  of  large  sums  in  the  maintenance  of  a 
costly  ff)rce  of  agents  engaged  in  a  reckless  strife  for 
comnetitive  lousiness. 


134  The   Railroad    Question. 

Under  the  operation  of  the  Interstate  Commerce  Law 
some  of  these  evils  have,  so  far  at  least  as  interstate  com- 
merce is  concerned,  disappeared,  and  others  have  been 
considerably  mitigated.  It  cannot  be  expected,  however, 
that  a  bad  s^-stem  of  railroad  management,  to  the  devel- 
opment of  which  the  ingenuity  of  railroad  managers  has 
contributed  for  two  generations,  could  be  entirely 
reformed  in  a  few  years.  It  is  a  comparatively  easy  task 
for  shrewd  and  unscrupulous  men,  assisted  by  able 
counsel  and  unlimited  wealth,  to  evade  the  spirit  of  the 
law  and  to  obey  its  letter,  or  to  violate  even  both  its 
letter  and  spirit,  and  escape  punishment  by  making  it 
impossible  for  the  State  to  obtain  proof  of  their  guilt. 

It  is  a  humiliating  spectacle  to  see  the  self-debased 
railroad  officials  confessing  their  own  guilt  by  refusing  to 
testify  before  the  Interstate  Commerce  Commission  on  the 
ground  that  they  would  thereby  criminate  themselves. 
Congress  should  have  sufficient  respect  for  this  commis- 
sion and  for  itself  to  provide  a  wa}^  to  punish  such 
recusant  witnesses  who  are  willing  to  degrade  themselves 
in  so  base  a  manner.  Whether  the  law  will  eventually  be 
respected  by  all  depends  upon  the  vigibnce  and  courage 
of  the  people. 

That  our  railroad  legislation  is  not  j'et  perfect  even  its 
friends  will  admit;  and  as  under  a  free  government  the 
demand  of  an  enlightened  public  opinion  is  the  first  step 
toward  the  enactment  of  a  law,  it  behooves  the  intelligent 
citizen  to  study  the  various  railroad  problems  and  to  then 
exert  his  influence  toward  bringing  about  such  a  solution 
of  them  as  justice  and  wisdom  demand. 

In  discussing  the  various  evils  of  railroad  management, 
the  author  will  commence  with  and  dwell  more  particularly 
upon  those  abuses  which  maybe  said  to  be  the  cardinal  ones, 


Raifro'ad  Abuses.  135 


viz. ,  discrimination,  extortion,  combinations  and  stock  and 
bond  inflation.  Wlien  these  are  once  etTectually  eradi- 
cated, other  abuses  of  railroad  management  which  have 
been  the  subject  of  public  complaint  will  not  long  survive 
them. 

One  of  the  strongest  arguments  that  could  be  adduced 
by  the  founders  of  the  American  Constitution  in  favor  of 
the  establishment  of  a  more  perfect  union  was  that  the 
inequality  of  taxes  placed  upon  commerce  by  the  various 
States  was  a  serious  obstacle  to  its  free  development. 
Much  as  the  individual  States  dislike  to  give  up  a  part  of 
their  sovereignty  to  a  central  or  national  power,  the 
demand  for  a  common  and  uniform  system  of  commercial 
taxation  was  so  great  that  they  were  forced  to  yield  and 
ratify  the  new  Constitution.  Our  forefathers  thus  con- 
sidered it  a  dangerous  policy  to  permit  a  single  State  to 
lay  any  imposts  upon  the  commercial  commodities  which 
passed  over  its  borders.  They  were  rightly  of  the  opin- 
ion that  industrial  and  commercuil  liberty  was  as  essential 
to  the  welfare  of  the  nation  as  political  freedom  and  that 
therefore  interstate  commerce  should  not  be  hemmed  in 
or  controlled  within  State  lines,  but  that  the  power  to 
regulate  it  should  be  lodged  in  the  supreme  legislative 
authority  of  the  nation,  the  Congress  of  the  United  States. 
For  over  half  a  century  Congress  alone  exercised  the 
power  thus  conferred  upon  it  by  the  people.  After  the 
introduction  of  railroads,  however,  their  managers  grad- 
ually assumed  the  right  to  regulate  the  commerce  of  the 
country  in  their  own  interest  througli  the  adoption  of 
arbitrary  freight  tarifll"s.  Freight  charges  are  practically 
a  tax  which  follows  the  commodity  from  the  producer  to 
the  consumer.  An  arbitrary  and  unjust  charge  is  there- 
fore an  arbitrary  and  unjust  tax  imposed  upon  the  public 


136  The  Railroad   Question. 

without  its  consent.  It  is  a  well-established  rule  of  society 
that  laws  should  be  equitable  and  just  to  all  citizens. 
Congress  never  assumed  the  role  of  Providence  by 
attempting  to  equalize  those  differences  among  individ- 
uals which  superior  intellect,  greater  industry  and  a 
thousand  other  uncontrollable  forces  have  ever  created 
and  will  ever  create.  It  has  been  reserved  to  railroad 
managers  to  demonstrate  to  the  public  that  a  power  has 
been  allowed  to  grow  up  which  has  assumed  the  right  to 
counteract  the  dispensations  of  Providence,  to  enrich  the 
slothful,  to  impoverish  the  industrious,  to  curtail  the 
profits  of  remunerative  industries  and  revive  by  bounties 
those  languishing  for  want  of  vitality,  to  humble  proud 
and  self-reliant  marts  of  trade  and  to  build  up  cities  in  the 
desert.  It  will  scarcely  be  claimed  even  by  railroad  man- 
agers that  their  policy  of  thus  arbitrarily  regulating  com- 
merce originated  in  philanthropic  motives.  They  are 
forced  to  admit  that  it  grew  out  of  an  attempt  to  increase 
the  income  of  railroads  by  the  extension  of  favors  to 
naturally  weak  enterprises  and  to  recoup  by  overtaxing 
stronger  ones. 

'  The  practical  operation  of  this  system  soon  showed  to 
railroad  managers  their  power  and  to  the  patrons  of  rail- 
roads their  dependence  upon  those  who  dispensed  railroad 
favors.  The  former  soon  discovered  that  their  power 
might  be  used  to  further  their  private  interests  as  well  as 
those  of  the  roads,  and  unscrupulous  patrons  were  not 
slow  to  offer  considerations  for  favors  which  they  coveted. 
When  such  favors  were  once  granted  by  the  officials  of 
one  road,  rival  roads  would  grant  similar  ones  in  self- 
protection.  Thus  this  vicious  s^'stem  grew  until  the  pay- 
ment of  a  regular  tariff  rate  was  rather  the  exception  than 
the  rule,  and  special  rates  became  an  indispensable  con- 
dition of  success  in  business.; 


Railroad  Abuses.  137 


We  may  distinguish  three  classes  of  railroad  discrimi- 
nations, viz. : 

1.  Those  which  affect  certain  individuals. 

2.  Those  which  affect  certain  localities. 

3.  Those  which  affect  certain  branches  of  business. 

Discrimination  between  individuals  is  the  most  objec- 
tionable, because  it  is  the  most  demoralizing  of  all.  Where 
such  discrimination  obtains,  ever}^  shipper  is  in  the  power 
of  the  railroad  corporation.  It  makes  of  independent 
citizens  of  a  free  country  fawning  parasites  and  obsequious 
sycophants  who  accept  favors  from  railroad  managers 
and  in  return  do  their  bidding,  however  humiliating  this 
may  be.  The  shipper,  realizing  that  the  manager's  dis. 
pleasure  or  good  will  toward  him  finds  practical  expression 
in  his  daily  freight  bills,  finally  loses,  like  the  serf,  all 
self-esteem  in  his  efforts  to  propitiate  an  overbearing 
master.  He  is  intimidated  to  such  an  extent  that  he 
never  speaks  openly  of  existing  abuses,  lest  he  lose  the 
special  rates  which  have  been  given  him,  or,  if  he  is  not  a 
participant  of  such  privileges,  lest  additional  favors  be 
given  to  his  rivals  and  they  be  thus  enabled  to  crush  him. 
Intimidation  of  shippers  prevailed  to  such  an  extent  pre- 
vious to  the  enactment  of  the  Interstate  Commerce  Law 
that  when,  in  1879,  the  special  committee  on  railroads 
appointed  by  the  legislature  of  New  York  invited  all  per- 
sons having  grievances  against  railroads  to  come  before 
them  to  testify,  not  one  shipper  testified  voluntaril3^  On 
the  contrary,  thej'  all  insisted  upon  being  subpoenaed, 
hoping  that  the  railroad  managers  would  not  hold  them 
responsible  for  any  statement  which  they  might  be  com- 
pelled to  make  under  such  circumstances.  The  report  of 
that  committee  stated  that  the  number  of  special  contracts 
in  force  within  the  period  of  one  year  on  the  New  York 


138  The  Railroad  Question. 

Central  and  Hudson  River  Railroad  alone  was  estimated  by 
the  railroad  people  at  6,000.  ^Mr.  Depew,  when  he  made 
the  statement:  "In  territories  comparatively  new,  and 
with  little  responsibility  on  the  part  of  the  managers  to 
distant  owners,  they  became  in  many  cases  very  arbitrary 
and  exercised  favoritism  and  discriminations,  which  led  to 
popular  indignation  and  legislation,"  had  probably  not 
heard  of  this.  The  committee's  report  further  stated 
that  these  special  rates  conformed  to  no  system  and  varied 
without  rule,  that  every  application  for  a  special  rate  was 
judged  by  itself  and  with  reference  to  its  own  peculiar 
circumstances,  and  that  it  depended  upon  the  judgment,  or 
rather  caprice,  of  the  officer  to  whom  the  application  was 
made,  whether  and  to  what  extent  a  special  rate  should  be 
granted.  The  reductions  made  to  privileged  merchants 
often  amounted  to  more  than  what  would  be  a  fair  profit 
to  the  dealer  on  the  commodities  shipped.  The  privileged 
dealer  was  thus  enabled  to  undersell  his  rivals  and  event- 
ually force  them  out  of  business  or  into  bankruptc}'.  It 
was  not  at  all  uncommon  for  railroad  companies  to  allow 
,  discounts  amounting  to  50,  60,  70  and  even  80  per  cent, 
of  the  regular  rates.  The  New  York  Central  gave  a  Utica 
dry-goods  merchant  a  special  rate  of  9  cents  while  the 
regular  rate  was  33  cents  on  first-class  freights.  The  low- 
est special  rate  granted  at  S3'racuse  was  as  low  as  20  per 
cent,  of  the  regular  tariff  rate  on  first-class  goods.  •  David 
Dows  &  Company  and  Jesse  Hoj't  &  Company,  by 
means  of  a  grain  rate  from  2^  to  5  cents  lower  than  those 
given  to  other  firms,  were  enabled  to  control  in  the  winter 
of  1877  the  grain  trade  of  New  York.  The  railroad  even 
extended  its  fostering  aid  to  A.  T.  Stewart  &  Co.,  giv- 
ing them  a  special  rate  ' '  to  build  up  and  develop  their 
business."     The  testimony  given  by  Mr.  Goodman,  assist- 


Rallriinil  A/jiiscs.  139 


ant  general  freight  agent  of  the  New  York  Central,  in 
reference  to  the  principle  by  which  he  was  guided  in  grant- 
ing special  rates,  is  of  sufficient  interest  to  be  given  a  place 
here : 

Question.  You  made  the  rate  for  A.  T.  Stewart  & 
Company?     Answer.    Yes,  sir. 

Q.  Was  that  to  build  up  and  develop  their  business? 
A.    Yes,  sir. 

Q.  That  was  the  object?  A.  That  was  one  of  the 
objects. 

Q.    January  nth,  1879?     A.    Yes,  sir. 

Q.  You  thought  that  business  was  not  j'et  sufficiently 
built  up  and  developed?  A.  No,  sir;  not  the  manufact- 
uring part  of  it. 

Q.  How  long  had  the  factories  of  A.  T.  Stewart  &  Com- 
pany been  in  existence?  A.  The  one  at  Duchess  Junc- 
tion about  three  years,  I  think;  it  isn't  completed  yet. 

Q.  And  they  were  languishing  and  suffering?  A.  To 
a  great  extent;  yes,  sir. 

Q.  And  3-ou  acted  as  a  fostering  mother  to  A.  T.  Stew- 
art &  Company  to  build  it  up?  A.  Yes,  sir;  I  added  my 
mite  to  develop  their  traffic;  we  wanted  to  carry  the  freight; 
boats  might  have  carried  it  in  the  summer. 

Q.  Do  you  know  anything  of  Gr.  C.  Buell  &  Company? 
A.    Yes,  sir. 

Q.  You  wanted  to  develop  their  business?  A.  Yes, 
sir;  they  are  at  Rochester — wholesale  dealers. 

Q.  Do  you  know  H.  S.  Ballou,  of  Rochester?  A.  I 
do  not. 

Q.  He  seems  to  be  a  grocer  there?  A.  A  small  con- 
cern, perhaps. 

Q.  Small  concerns  are  not  worth  developing,  according 
to  your  opinion?  A.  Our  tariff  rates  are  low  enough  for 
them  at  Rochester. 

Q.  That  is  to  say,  a  small  concern  ought  to  pa}^  40, 
30,  25  and  20,  as  against  a  large  concern,  13;  that  is  j'our 
rule?  A.  Well,  if  he  is  a  grocer,  most  of  his  business  is 
fourth-class  freight, 


140  The  Railroad  Question. 

Q.  And  he  ought  to  pay  20,  as  against  13?  A.  Yes, 
sir. 

Q.  That  small  man  has  no  right  to  develop?  A.  He 
has  the  same  chance  that  the  other  man  has. 

Q.    At  20  against  13?     A.    Oh,  yes. 

Q.  Do  you  call  that  the  same  chance?  A.  About  the 
same  chance,  yes,  sir. 

Q.    You  consider  it  the  same  chance?     A.    Yes,  sir. 

Many  reasons  were  assigned  by  railroad  men  in  justifi- 
cation of  their  practices.  It  was  claimed  that  special  rates 
were  given  to  regular  shippers,  but  it  has  been  proved 
that  not  all  regular  shippers  had  special  rates,  and  that 
persons  who  made  only  single  shipments  were  often  for- 
tunate enough  to  obtain  special  favors.  It  was  further 
claimed  that  special  rates  were  given  to.  those  who,  start- 
ing out  new  in  business  or  developing  new  enterprises, 
needed  aid  and  encouragement.  But  it  was  shown  on  the 
other  hand  that  the  aid  and  encouragement  thus  given  to 
some  bankrupted  others,  and  in  the  end  deprived  the 
companies  of  more  business  than  their  policy  of  discrimi- 
nation brought  them.  Railroad  managers  also  argued 
that  the)'  could  afford  to  make  lower  rates  on  large  ship- 
ments than  on  small  ones  for  the  same  reasons  that  the 
wholesale  merchant  can  sell  his  goods  for  less  than  the 
retailer.  But  while  this  may  be  a  good  reason  why  rates 
on  car-load  shipments  should  be  lower  than  rates  on  ship- 
ments in  less  than  car-load  lots,  it  is  certainly  no  good 
reason  why  five  car-loads  belonging  to  one  shipper  should 
be  transported  the  same  distance  for  less  than  five  car- 
loads belonging  to  five  shippers.  In  the  case  of  local 
shipments  the  car  is  scarcely  ever  loaded  to  its  full 
capacity:  one  shipment  after  another  is  taken  from  it  as 
the  train  moves  along,  and  the  car  perhaps  reaches  its 
final  destination  nearlv,  if  not  entirely,  empty.     The  ter- 


Rdllrond  Abuses.  141 


minal  charges  are  here  also  largely  increased,  and  it  is  but 
just  that  the  shipper  should  pay  the  additional  cost  of 
carrying  and  handling  the  goods.     The  case  is  entirely 
different  when  the  railroad  company  carries  five  full  car- 
loads from  one  station  of  its  line  to  another.     Whether 
the  J'  have  been  loaded    by  one  or  five  persons,  whether 
they  are  consigned  to  one  or  five  persons,  matters  little 
to  the  railroad  company.      It  merely  transports  the  cars, 
and  in  either  case  its  responsibility  and  its  services  are  the 
same.      The  car-load  must  therefore   be  accepted  and  is 
now  generally  accepted  by  the  best  railroad  men   as  the 
unit  of  wholesale  shipments,  and  an}'  discrimination  made 
in    favor   of   large    wholesale   shippers    is   arbitrary    and 
unjust.      In  the  shipment  of  some  commodities,  such  as 
wheat,  flour  and  coal,  a  small  advantage  in  rates  is  suffi- 
cient to  enable  the  favored  shipper  to   "freeze  out"   all 
competitors.     It  is  certainly  not  to  the  interest  of  any 
railroad  compimy  to  pursue  such  a  policy ;  for  by  driving 
small  establishments  out  of  the  business  it  encourages 
monopoly,  which  almost  invariably  enhances  prices  and 
decreases  consumption.    The  railroad  thus  suffers  in  com- 
mon with  the  public  the  consequences  of  its  short-sighted 
policy.     That  even  railroad  managers  realize  that  these 
practices  cannot  be  defended  upon  any  principle  of  justice 
or  equity  is  apparent  from  the  fact  that  one  of  the  never- 
varying  conditions  of  special  rates  is  that   they  be  kept 
secret.    A  specimen  of  a  special  rate  agreement  which  was 
placed  before  the  New  York  investigating  committee  is 
here  presented  to  the  reader: 

' '  This  agreement,  made  and  entered  into  this  eigh- 
teenth day  of  March,  1878,  by  and  between  the  New 
York  Central  and  Hudson  River  Railroad  Company,  party 
of  the  first  part,  and  Schoellkopf  &  Mathews,  of  the 
city  of  Buffalo,  N.  Y.,  party  of  the  second  part; 


142  The  Ratlroad  Question. 

'  'Wituesseth,  That  said  party  of  the  first  part  hath  prom- 
ised and  agi'eed,  and  by  these  presents  does  promise  and 
agree  to  transport  wheat  from  the  elevator  in  Buffalo, 
reached  directly  by  said  first  party's  tracks,  except  at  such 
mills  as  time  said  tracks  may  be  obstructed  by  snow  or  ice, 
to  the  which  said  second  party  may  erect  or  operate  at 
Niagara  Falls,  N.  Y. ,  at  and  for  the  rate  of  one  and  a 
quarter  cents  per  bushel. 

' '  And  further,  that  said  first  party  shall  and  will  at  all 
times  give,  grant  and  allow  to  said  second  parties  as  low 
rate  of  transportation  on  all  property  shipped  by  them 
from  their  said  mills  at  Niagara  Falls,  and  as  favorable 
facilities  and  accommodation  in  all  respects  as  are  afforded 
by  the  party  of  the  first  part  to  the  millers  of  Buffalo  and 
Black  'Rock.  And  also  that  the  said  party  of  the  first 
part  will  transport  for  said  second  party  all  of  their  east- 
bound  New  York  freight  at  and  for  the  price  or  rate  of 
forty-seven  per  cent,  of  the  current  all-rail  through  rates, 
via  the  route  of  party  of  the  first  part,  from  Chicago  to 
New  York,  at  the  times  of  shipment,  adding  thereto  three 
cents  per  barrel  for  flour  and  one  and  one- half  cents  per 
hundred  pounds  for  mill  feed  or  grain,  as  a  terminal 
charge,  to  provide  for  the  incidental  expenses  attending 
local  transportation. 

' '  And  will  transport  their  freight  to  Boston  and  all ' 
points  in  New  England,  taking  Boston  rates  at  the  same 
rate  as  to  New  York,  with  ten  cents  per  barrel  added  for 
flour  and  five  cents  per  hundred  pounds  added  for  mill 
feed  or  grain. 

' '  Provided,  however,  and  this  agreement  is  made  upon 
the  express  understanding  and  consideration,  that  ^said 
second  party  shall  regard  and  treat  this  agreement  as  con- 
fidential, and  will  use  all  reasonable  precaution  to  keep 
the  same  secret. 

' '  And  upon  condition  also  that  said  second  party  shall 
ship  by  the  first  party's  road  all  the  product  from  their 
mill  at  Niagara  Falls  destined  to  all  points  in  New  York, 
Pennsylvania  and  New  England,  reached  by  said  first 
party,  directly  or  by  connections  with  other  routes. 

' '  And  this  agreement  shall  be  and  remain  in  force  for 


Ridhoad  Abuses.  143 


the  term  of  five  years  from  and  following  the  first  day  of 
September,  1878,  after  which  period  it  may  be  terminated 
by  sixty  days'  written  notice  from  either  party. 

' '  In  witness  whereof,  the  parties  hereto  have  signed 
these  presents  the  day  and  year  first  above  written. 

-N.Y.  C.  &H.  R.  R.  R.  Co.," 
By  J.  H.  RuTLER, 

"General  Traffic  Manager. 

"SCHOELLKOPF  &  MaTHEWS.  " 

It  will  be  noticed  that  this  agreement  was  based  upon 
the  expressed  condition  that  Schoellkopf  &  Mathews 
treat  it  as  "  confidential, "  and  use  all  reasonable  precau- 
tion to  keep  it  secret.  It  is  difficult  to  account  for  this 
strong  injunction  of  secrecy  except  upon  the*  assumption 
that  the  managers  of  the  road,  conscious  of  the  great  wrong 
which  they  inflicted  upon  the  body  of  the  people  by  their 
discriminations,  hoped  to  escape  public  criticismby  adopt- 
ing a  policy  of  secret  dealing.  Much  as  special  rates 
were  sought  after,  but  few  shippers  to  whom  they  had  1)een 
granted  were  contented  with  their  lot,  for  none  was  confid- 
ent that  his  rivals  did  not  have  better  rates  than  himself. 

Discriminations  between'  localities  had  their  origin  in 
the  natural  desire  of  competing  roads  to  increase  their 
business  at  the  expense  of  their  rivals.  When  two  or 
more  railroads  touched  the  same  point  each  would  attempt 
to  secure  the  largest  possible  share  of  the  through  busi- 
ness by  holding  out  every  possible  inducement  in  rates  to 
the  shippers  of  that  place.  Indeed,  the  freight  rates  at 
competitive  points  were  often  so  low  that  railroad  man- 
agers found  themselves  placed  in  a  rather  unpleasant 
dilemma.  They  either  had  to  admit  that  the  rates  charged 
by  them  at  non-competitive  places  were  exorbitant  or 
that  they  were  carrying  the  freights  of  competitive  points 
at  a  loss  and  were   thus  squandering  the  monc}'  of  their 


144  'llic  Railroad  Question. 

stockholders.  They  preferred  as  a  rule  to  admit  that  they 
were  doing  competitive  business  at  a  loss,  but  asserted 
that,  inasmuch  as  they  were  compelled  to  run  their  trains, 
they  could  better  afford  to  do  competitive  business  tem- 
porarily at  a  loss  than  not  to  do  it  at  all.  The  same  logic 
might  with  equal  propriety  be  employed  by  the  grocer. 
To  draw  to  him  distant  customers,  he  might  offer  to  sell  to 
them  at  cost  or  even  at  a  loss;  and  then,  to  recuperate,  he 
might  advance  the  prices  of  his  goods  for  his  regular  cus- 
tomers. If  there  is  any  difference  between  the  grocer 
and  the  railroad  company,  it  lies  in  the  fact  that  the 
former's  old  customers  would  soon  find  relief  at  a  rival 
store,  while  the  patrons  of  the  railroad  at  non-competitive 
points  are  like  the  traveler  in  the  hands  of  a  highwayman, 
without  immediate  redress.  The  railway  company  which 
discriminates  between  competitive  and  non-competitive 
points  forgets  that  its  line  is  a  common  highway  for  all 
points  triluitary  to  it;  that  all  have  equal  rights,  and  that 
the  onl}^  differences  in  tariff  which  the  principles  of  the 
common  law  permit  are  those  which  arise  from  a  differ- 
ence of  service  and  cost.  All  other  differences  that  rail- 
road companies  may  make  are  unjust  discriminations  in 
violation  of  their  charter  and  expose  them  to  a  forfeiture 
of  the  franchises  conferred  upon  them. 

The  nature  and  extent  of  the  discrimination  practiced 
between  different  places  are  often  such  that  no  interest  of 
the  company  can  possibly  be  subserved  by  them,  and  the 
conclusion  is  forced  upon  us  that  the  advantages  granted 
by  railroad  managers  to  certain  places  are  designed  to 
serve  chiefly  personal  and  selfish  interests.  The  great 
fortunes  amassed  in  a  brief  period  of  time  by  railroad 
managers  can  in  almost  every  case  be  traced  to  stock,  real 
estate,  commercial  and  other  speculations  directly  or  indi- 


R(i!ln>iid  Abases.  145 


rectly  connected  with  railroad  construction  or  manage- 
ment. And  where  other  than  personal  interest  cannot  be 
shown,  this  is  the  onl}'  basis  upon  which  the  man}'  appar- 
ent absurdities  of  railroad  discrimination  can  be  harmon- 
ized. 

It  is  claimed  by  railroad  men  that  transportation  by 
water  is  a  regulator  of  railway  rates  which  they  must 
respect.  It  is  contended,  for  instance,  that,  although 
the  cities  situated  on  our  large  lakes  enjoy  superior  com- 
mercial advantages  which  are  mainly  due  to  their  havino- 
at  their  disposal  water  communication  with  the  Atlantic 
Ocean,  inland  towns  have  no  cause  to  complain  against  the 
railroads  for  not  equalizing  those  differences  which  nature 
has  largely  created.  It  might  be  more  difficult  to  meet 
this  argument  if,  owing  to  peculiar  combinations,  these 
water  rates  were  not  made  to  extend  their  influence  to 
almost  every  inland  city  north,  east  and  south  in  the 
Union,  and  if  those  cities  were  not  given  much  lower  rates 
than  hundreds  of  places  much  nearer  the  lakes.  The 
teamster  who,  half  a  century  ago,  found  it  impossible  to 
compete  with  the  canal,  river  or  lake  boats,  simply  surren- 
dered the  field  to  them  and  confined  his  operations  to  such 
a  territory  as  could  give  him  assurance  of  a  profitable 
business.  Let  the  railroads  do  likewise.  No  company 
has  a  right  to  destroj^  a  rival  route,  water  or  rail,  by 
adopting  special  tariffs  for  competing  points.  There  are 
at  points  accessiljle  to  water  transportation  certain  freights 
requiring  speedy  carriage  which  will  go  to  the  railroads  at 
profitable  rates,  but  the  heavier  freights,  as  coal,  lumber 
and  even  certain  kinds  of  grain,  should  go  to  the  carrier 
by  water  if  he  can  afford  to  transport  them  at  lower  cost. 

There  have  been  but  fcAv  legislative  investigations  of 
railroad  abuses  in  this  country,  but  the  disclosures  which 


14G  Till'   Railroad  Quesfion. 

they  have  made  to  the  public  are  astounding.  The  most 
noteworth}^  of  these  were  made  by  the  Hepburn  com- 
mittee, of  New  York,  to  which  reference  has  ah'eady  lieen 
made.  It  is  difficult  to  understand  how  a  free  and 
enlightened  community  could  so  long  and  so  patiently 
bear  railroad  despotism.  Individual  discrimination  might, 
under  the  veil  of  secrecy,  long  escape  notice,  but  that  a 
system  of  open  and  widespread  discrimination  affecting 
every  non-competitive  and  even  many  a  competitive 
point  in  the  State,  doing  visible  and  irreparable  injury  to 
thousands  of  shippers,  and  infnnging  upon  the  rights  of 
millions,  should  long  be  borne  by  a  free  and  enlightened 
people,  is  a  strange  phenomenon  of  democratic  endurance. 

It  would  lead  us  too  far  from  our  subject  to  rcAiew  in 
detail  the  many  and  glaring  instances  of  local  discrimina- 
tion which  the  report  enumerates.  A  few  will  suffice  to 
show  their  scope  and  nature. 

William  AV.  Mack,  of  Rochester,  a  manufacturer  of  edged 
tools,  testified  that,  in  order  to  save  fourteen  cents  per 
hundredweight  on  his  freights  to  Cincinnati,  he  shipped  his 
goods  to  New  York  and  had  them  shipped  from  there  to 
their  destination,  via  Rochester;  and  that  he  availed  himself 
of  the  same  roundabout  route  for  his  8t.  Louis  shipments, 
and  saved  thereby  eighteen  cents  per  hundredweight.  In 
both  of  these  cases  the  railroad  company  carried  the  goods 
700  miles  farther  than  the  direct  distance  for  a  less  charge. 

Port  Jervis  millers  had  their  grain  shipped  from  the 
AYest  to  Newburgh,  a  point  fifty  miles-,to  the  east  of  them, 
and  then  had  it  returned  to  Port  Jervis  on  the  same  line, 
at  a  less  rate  than  that  charged  for  a  direct  shipment. 

The  grain  rates  from  Chicago  to  Pittsburgh  were 
25  cents  per  hundred  in  March,  1878,  and  only  15  cents 
from  Chicago  U>  New  York. 


Rati  road  Ah  uses.  147 


Flour  was  carried  from  Milwaukee  to  New  York  for 
20  cents,  while  the  rate  from  Rochester  to  New  York 
was  30  cents  at  the  same  time.  It  was  also  carried 
from  East  Sc.  liouis  to  Troy  at  the  same  rate  as  from 
Rochester  to  Troy.  The  rate  on  butter  from  8t.  Law- 
rence Count}-.  N.  Y. ,  to  Boston,  over  the  Ogdensburg  and 
Lake  Champlain  and  Vermont  Central,  was  60  cents  per 
hundred  ;  from  the  nearer  county  of  Franklin,  70  cents; 
it  then  continued  to  increase  as  the  distance  decreased, 
until  it  reached  90  cents  at  St.  All^ans,  Vermont. 

Soap  shipped  by  Babbit  &  Co. ,  of  New  York,  to  Crouse 
&  Co. ,  of  Syracuse,  paid  8  cents  per  box  when  the  freight 
was  paid  in  Syracuse,  but  12  cents  per  box  when  paid  by 
the  shipper  in  New  York. 

It  cannot  even  be  said  that  New  York  fared  worse  than 
any  of  her  sister  States.  There  is  hardly  a  business  man  in 
any  communit}-  in  the  United  States  who  cannot  cite  many 
cases  of  similar  discrimination.  Hundreds  of  well  au- 
thenticated cases  have  been  reported  from  every  part  of 
the  countr}'.  A  few  striking  ones  may  be  given  space  here : 
I  The  Illinois  Central  Company  hauled  cotton  from  Mem- 
phis to  New  Orleans,  a  distance  of  450  miles,  at  $1.00  a 
bale,  while  the  rate  from  Winona,  Miss. ,  to  New  Orleans, 
about  two-thirds  of  the  distance,  was  $3.25  a  bale.  The  same 
company  charged  for  fourth-class  freight  from  Chicago  to 
Kankakee,  a  distance  of  56  miles,  16  cents  per  hundred, 
and  only  10  cents  to  Mattoon,  116  miles  farther.  The 
rate  from  New  York  to  Ogden  was  $4. 65  per  hundred, 
and  only  $2.25  per  hundred  from  New  York  to  San  Fran- 
cisco. The  car-load  rate  on  the  Northern  Pacific  was  $200 
from  New  York  to  Portland  and  just  twice  as  much  to  a 
number  of  points  from  lOO  to  125  miles  east  of  Portland. 
The    Chicago,    Biuliugtou  and  Quinc}'  hauled    stock  from 


148  The  Railroad  Question. 

points  beyond  the  Missouri  River  to  Chicago  for  |30  per 
car-load,  while  it  exacted  $70  per  car  in  Southwestern 
Iowa  for  a  much  shorter  haul. 

To  what  extent  local  discrimination  has  been  carried  1j)' 
railroad  companies  is  well  illustrated  by  the  following  in- 
cident: A  nurseryman  residing  at  Atlantic,  Iowa,  a  sta- 
tion on  the  Chicago,  Rock  Island  and  Pacific  Railroad,  60 
miles  east  of  Council  Bluffs,  bought  a  car-load  of  grape- 
vines at  Fredonia,  New  York.  Finding  that  the  through 
rate  from  Fredonia  to  Council  Bluffs,  plus  the  local  rate 
from  the  latter  place  to  Atlantic,  was  less  than  the  rate  for 
the  direct  shipment  from  Fredonia  to  Atlantic,  he  caused 
the  car  to  be  consigned  to  Council  Bluffs,  intending  to 
have  it  thence  hauled  back  to  Atlantic.  Being  short  of 
stock  at  the  time  the  train  containing  his  car  passed 
through  his  town  on  its  way  to  Council  Bluffs,  the 
consignee  prevailed  upon  the  station  agent  to  set  out  his 
car.  In  due  time  he  received  a  request  from  the  general 
office  of  the  railroad  to  pay  an  amount  equal  to  the  rate 
per  car-load  from  Council  Bluffs  to  Atlantic.  The  request 
was  promptly  complied  with  by  the  appreciative  nursery- 
man, who  after  all  had  been  saved  an  annoying  delay  by 
the  courtes)'  of  the  company's  agent. 

An  infinite  number  of  similar  discriminations  might  be 
cited.  They  all  show  the  same  violation  of  the  funda- 
mental principles  of  justice  and  equity,  the  same  despot- 
ical  assertion  of  the  power  of  the  railroads  to  regulate  the 
commerce  of  the  country  as  the  caprice  or  selfish  "interests 
of  their  managers  might  direct. 

Discriminations  between  commodities,  or,  as  they  might 
also  be  called,  discriminations  in  classification,  are  prob- 
abl}'  the  most  common  of  unjust  railroad  practices.  For 
the  purpose  of  establishing   as  near  as  may  be  uniform 


liitilnntil  AbusfS.  1  [[) 


rules  in  all  matters  pertaining  to  rates,  the  various  roads 
operating  in  a  certain  territory  usually  form  traffic  asso- 
ciations. The  general  freight  agents  of  the  roads  that 
are  members  of  the  association  in  turn  form  a  select  body 
known  as  the  rate  committee.  These  committees  of 
freight  agents  have  for  more  than  twenty  years  consti- 
tuted the  supreme  authority'  in  all  matters  pertaining  to 
.freight  classification.  The  trunk  line  classification  recos- 
nizes  six  regular  and  two  special  classes,  and  every  arti- 
cle known  to  commerce  is  placed  in  one  of  these  classes. 
One  whom  Providence  has  not  favored  with  the  myster- 
ious wisdom  of  a  general  freight  agent  might  suppose 
that  considerations  of  bulk,  weight,  insurance  and  simi- 
lar factors  formed  a  basis  of  railroad  classification.  Noth- 
ing, however,  is  farther  from  the  truth.  Freight  charges, 
when  permitted  to  be  fixed  by  railroad  companies,  are 
invariably  such  as  the  traffic  wall  beai',  and  freight  classi- 
fications are  arranged  on  this  principle,  provided  compe- 
tition by  water,  rail  or  other  land  transportation  does  not 
demand  a  modification.  It  is,  as  a  rule,  not  to  the  advan- 
tage of  ?  railroad  to  entirely  starve  out  an}^  commercial 
or  industrial  concern  along  its  line.  Hence  tariflfs  are 
scarcely  ever  made  entirely  prollibitor3^  Railroads  pro- 
ceed here  upon  the  principle  of  the  robber  knight  of  med- 
iaeval times,  who  simply  plundered  the  wayfaring  trader 
to  such  an  extent  as  to  reduce  his  profits  to  a  minimum. 
He  never  stripped  him,  for  by  doing  so  he  would  have 
prevented  his  return  and  would  have  destroyed  his  own 
source  of  revenue.  In  like  manner  a  railroad  will  never 
annihilate  any  weak  branch  of  business  along  its  line,  nor 
will  it,  if  it  is  in  its  power,  permit  any  business  to  pros- 
per without  paying  to  it  heav}'  tributes  out  of  its  profits. 
Every  commodity  is  therefore  made  to  pay  a  transporta- 


150  Thr   Rinlroad   Qiresfiou. 

• ' ■ — — V 

tion  tax  based  chiefly  on  its  A'alue  and  the  profit  which  it 
yields,  and  all  classifications  are  prepared  with  this  object 
in  "\iew. 

The  })rotection  which,  through  exceptional!}'  low  rates, 
is  extended  by  the  railroad  companies  to  certain  indus- 
tries, may  not  be  objectionable  per  se,  but  the  question 
arises  whether  the  railroad  companies  or  the  people 
should  exercise  the  right  to  determine  when  and  where 
such  protection  is  necessary.  Moreover,  to  tax  one 
branch  of  commerce  for  the  benefits  bestowed  upon 
another  is  a  practice  of  extremely  doubtful  propriety,  and 
the  power  to  do  so  should  certainly  never  be  conferred 
upon  a  private  corporation.  When  customs  laws  are  pro- 
posed in  Congress  ample  opportunity  is  given  to  the  rep- 
resentatives of  the  various  industries  of  the  country  to  be 
heard  upon  the  subject.  No  hasty  step  is  taken.  Mem- 
bers of  Congress  have  every  opportunity  to  ascertain  the 
sentiment  of  their  constituents,  through  the  public  press, 
petitions  and  private  correspondence.  The  subject  is  dis- 
cussed in  all  its  phases,  })oth  in  the  committee-rooms  and 
upon  the  floors  of  both  houses  of  Congress.  Every 
detail  is  fully  considered,  and  many  compromises  are 
often  necessary  to  secure  for  a  l)ill  the  support  of  tlie 
majority.  When  it  finally  passes  it  represents  the  will  of 
the  people,  or  at  least  the  will  of  their  legal  representa- 
tives, who  may  be  expected  to  know  their  wants  and  are 
accountable  to  them  for  their  acts.  Freight  classifica- 
tions, however,  while  they  are  fully  as  far-reaching  as 
customs  laws,  are  made  b}'  a  few  freight  agents  meeting 
jn  secret  session,  listening  to  no  advice  and  acknowledg- 
ing .no  higher  autliority. 

It  is  claimed  by  the  railroad  men  that  it  is  to  the  inter- 
est of  railroad  companies   to  do   justice  to  all,  and   that 


lidllrond  Abuses.  151 


the  best  classification  for  the  largest  number  of  people  is 
also  the  best  for  the  roads.  If  this  be  true,  it  is  difficult 
"to  see  wh}'  railroads  should  fail  to  consult  their  patrons 
in  the  arrangement  of  their  freight  classifications.  Intel- 
ligent shippers  may  certaiul}'  be  supposed  to  know  as  well 
as  the  railroad  companies  what  classification  is  to  their 
common  interest.  Kailroad  managers  are  naturally  des- 
potical.  The}'  do  not  wish  and  do  not  tolerate  any  out- 
side interference  with  what  they  obstinately  term  their 
private  business.  Even  if  the  general  policy  of  the  com- 
panies designed  the  greatest  good  to  the  greatest  number, 
the  opportunities  and  temptations  of  their  agents  to  pur- 
sue selfish  ends  or  take  advantage  of  individuals  in  the 
preparation  or  application  of  their  tariffs  are  such  that  in 
the  practical  execution  the  evil  will  always  outweigh  the 
good.     . 

It  is  not  within  the  scope  of  the  present  inquirj^  to  re- 
view in  detail  the  various  classifications  in  force,  or  to 
point  out  the  unjust  features.  The  author  will  confine 
himself  to  showing  by  a  few  characteristic  examples  that 
the  power  now  in  the  hands  of  the  railroad  companies  to 
classify  the  various  commodities  of  commerce  for  the  pur- 
pose of  rating  is  greatly  abused  and  is  a  potent  means  of 
railroad  extortion.  And  that  it  may  not  be  charged  that 
aljuses  have  been  cited  which  are  a  thing  of  the  past,  the 
examples  will  chiefly  be  taken  from  cases  which  have 
come  before  the  Interstate  Commission  for  adjudication, 
j  A  complaint  was  filed  with  the  commission  in  1887  by 
TTX  Reynolds  against  the  Western  New  York  and  Penn- 
sylvania Railroad  Company,  from  which  it  appeared  that 
that  company  charged  a  greater  price  for  the  transporta- 
tion of  railroad  ties  from  points  in  the  State  of  Pennsyl- 
vania   to    points    in   the  State   of    Xow    Yoi-k    than    was 


152  The  Railroad   Question. 


charged  at  the  same  time  for  the  transportation  of  lumber 
between  the  same  points.  The  commission  held  that  this 
was  a  case  of  unjustilialile  discrimination  and  ordered  the 
company  to  place  railroad  ties  in  the  same  class  with  other 
rough  lumber.  Many  AYestern  roads  for  years  have  been 
guilty  of  the  same  discrimination.  The  reasons  for  such 
a  policy  are  obvious.  A  high  tariff  on  railroad  ties  pre- 
vents their  being  shipped,  depreciates  their  market  price 
at  home,  to  the  sole  benefit  of  the  discriminating  com- 
pany, which  is  thus  enabled  to  buy  ties  at  a  low  price. 
Prohibitory  rates  on  ties  and  rails  are  also  often  main- 
tained by  railroad  companies  to  either  delay  or  render 
more  costly  the  construction  of  new  lines  which  threaten 
to  become  their  competitors.  The  Union  Pacific  Railroad 
Company  several  years  ago  even  went  so  far  as  to  make 
prohibitory  rates  on  steel  rails  intended  for  the  construc- 
tion of  a  road  which  promised  to  become  a  competitor  of 
one  of  its  connecting  lines. 

From  another  case  decided  by  the  Interstate  Commerce 
Commission  it  appeared  that  the  Lake  Shore  and  Michi- 
gan Southern  Railway  Company  charged  for  blocks 
intended  for  wagon-hubs,  and  upon  which  only  so  much 
labor  had  been  expended  as  was  necessary  to  put  them  in 
condition,  a  higher  rate  than  for  lumber,  claiming  that 
such  blocks  were  unfinished  wagon  material  and  were 
therefore,  as  articles  of  manufacture,  subject  to  higher 
charges  than  raw  material.  The  commission  justly  held 
that  these  blocks  were  as  much  to  be  regarded  as  raw 
material  as  the  boards  from  which  wagon-boxes  are  made. 

In  the  classification  of  the  Southern  Railwaj^  and  Steam- 
ship Association  pearline  was  placed  in  the  fourth  class,  with 
a  rate  of  73  cents  per  hundred  pounds,  and  common  soap  in 
the  sixth  class,  with  a  rat3  of  49  cents  per  hundred  pounds. 


Railroad  Abuses.  153 


This  latter  article,  when  shipped  l)y  large  manufacturers, 
enjoyed  besides  a  special  rate  of  33  cents  per  hundred- 
weight. Pearl ine  and  soap  are  competitive;  there  is  no 
appreciable  difference  between  them  as  regards  the  cost 
of  transportation ;  but  one  commands  a  higher  price  in  the 
market  than  the  other,  and  upon  this  fact  solely  did  the 
railroad  company  base  its  alleged  right  to  levy  upon 
pearline  a  transportation  tax  120  per  cent,  in  excess  of 
that  levied  upon  soap,  though  the  service  rendered  by  the 
company  was  the  same  in  either  case.  The  commission 
held  that  the  discrimination  made  by  the  "special  rate" 
of  the  Southern  Railway  and  Steamship  Association  be- 
tween pearline  and  common  soap  was  unjust,  and  ordered 
that  it  be  discontinued  and  that,  with  common  soap  in  the 
sixth  class,  pearline  be  placed  in  the  fifth. 

For  years  the  rate  from  Indianapolis  to  New  York  was 
the  same  for  coi-n  as  for  its  direct  products,  such  as 
ground  corn,  cracked  corn,  corn  meal,  hominy  and  corn 
feed.  Such  a  tariff  made  it  possible  for  Western  mills  to 
compete  with  similar  mills  that  had  been  established  in 
the  East,  since  a  discrimination  of  5  per  cent,  was  suffic- 
ient to  absorb  three  or  four  times  the  piofits  of  any  West- 
ern mill.  It  was  shown  by  the  evidence  produced  that 
the  actual  cost  of  transportation  was  substantially  the 
same  for  direct  corn  products  as  for  the  raw  corn.  The 
only  defense  which  the  railroad  company  could  make  for 
this  discrimination  was  that  in  the  carriage  of  raw  corn 
they  had  to  meet  lake  competition.  The  weakness  of 
this  argument  will  be  perceived  when  it  is  remembered 
that  Indianapolis  is  154  miles  from  the  nearest  lake-ship- 
ping point.  There  is  but  little  doubt  that  this  discrimi- 
nation was  made  b}^  the  railroad  company  because  it  was 
to  its  interest  to  haul  the  raw  corn  from  the  West  to  the 


154  The    Rail  road    Question. 

East  and  to  return  it  in  altered  form.  Railroads  care,  as 
a  rule,  little  for  a  waste  of  force,  if  such  waste  is  to  their 
own  advantage. 

'  In  another  case  brought  before  the  commission  in  1 889 
it  was  shown  that  the  "Official  Classification"'  placed 
common  soap  in  carload  lots  in  Class  V,  while  such  arti- 
cles as  coffee,  pickles,  salted  and  smoked  fish  in  boxes 
or  packages,  rice,  starch  in  barrels  or  boxes,  sugar,  cere- 
a  line  and  cracked  wheat  are  placed  in  Class  VI.  The 
chief  reply  of  the  railroad  companies  to  this  complaint 
was  that  soap  was  justly  placed  in  Class  V  because  the 
components  from  which  it  is  in  part  made  stood  in 
Class  V. 

In  another  case  it  was  shown  that  one  kind  of  soap 
was  burdened  with  a  higher  transportation  tax  than 
another,  irrespective  even  of  cost,  because  one  had  been 
advertised  as  toilet  and  the  other  as  laundry  soap. 

The  principle  of  charging  what  the  trafi!ic  will  bear  is 
well  illustrated  by  the  relative  rates  on  patent  medicines 
and  ale  and  beer,  as  maintained  by  the  Official  Classifica- 
tion. 

'  In  a  complaint  made  by  a  prominent  manufacturer  of 
proprietary  medicines  against  the  New  York  Central  and 
other  roads,  it  was  shown  that  the  complainant's  products 
were  shipped  at  owner's  risk,  and  that  they  were  in  bulk 
and  intrinsic  value  similar  to  ale  and  beer,  but  that  in 
spite  of  these  analogies  the  former  were  rated  as  first- 
class  and  the  latter  as  third-class  goods,  simply  because 
they  retailed  at  a  higher  price. 

Another  unwarrantable  discrimination  is  that  in  favor 
of  live  stock  and  against  dressed  beef.      While  Mr.  Fink, 
the  commissioner  of  the  Trunk  Line  Pool,  himself  admit 
ted  that  the  cost  of  carrying  dressed  beef  from  Chicago  to 


Rdilnxul  Abuses.  155 


New  York  was  only  Q^  cents  per  100  pounds  in  excess  of 
the  cost  of  hauling  live  stock,  the  trunk  lines  maintained 
on  dressed  beef  a  rate  75  per  cent,  higher  than  that  on 
live  cattle.  The  railroad  companies  asserted  that  this 
was  due  to  those  people  in  the  East  whose  living  depended 
on  the  live-stock  interest.  The  railroads  have  in  this 
assumed  a  paternalism  which  would  not  be  tolerated  even 
in  the  Government.  To  protect  the  East,  railroads  will 
not  permit  the  West  to  engage  in  new  industries. 

The  position  which  the  Interstate  Commerce  Commis- 
sion has  assumed  in  interpreting  the  rights  of  shippers 
under  the  law  which  railroad  companies  are  bound  to 
respect  in  the  preparation  of  their  tariff  sheets  and  classi- 
fications cannot  but  be  most  gratifying  to  the  people.  In 
a  decision  relating  to  the  classification  and  rates  for  car- 
loads and  less  than  car-loads,  filed  March  14,  1890,  the 
commission  laid  down  the  following  rules  for  the  guidance 
of  railroad  companies: 

"  1 .  Classification  of  freight  for  transportation  purposes 
is  in  terms  recognized  by  the  act  to  regulate  commerce, 
and  is  therefore  lawful.  It  is  also  a  valuable  convenience 
both  to  shippers  and  carriers. 

"2.  A  classification  of  freight  designating  different 
classes  for  car-load  quantities  and  for  less  than  car-load 
quantities  for  transportation  at  a  lower  rate  in  car-loads 
than  in  less  than  car-loads  is  not  in  contravention  of  the 
act  to  regulate  commerce.  The  circumstances  and  con- 
ditions of  the  transportation  in  respect  to  the  work  done 
by  the  carrier  and  the  revenue  earned  are  dissimilar,  and 
may  justify  a  reasonable  difference  in  rate.  The  public 
interests  are  subserved  by  car-load  classification  of  prop- 
erty that,  on  account  of  the  volume  transported  to  reach 
markets  or  supply  the  demands  of  trade  throughout  the 
country,  legitimately  or  usually  moves  in  such  ([uantities. 

"3.  Carriers  are  not  at  liberty  to  classify  property  as  a 
basis  of  transportation  rates  and  impose  charges  for  its 


156  The  Railroad    Question. 


carriage  with  exclusive  regard  to  their  own  interests,  but 
they  must  respect  the  interests  of  those  who  may  have 
occasion  to  employ  their  services,  and  conform  their 
charges  to  the  rules  of  relative  equality  and  justice  which 
the  act  prescribes. 

"4.  Cost  of  service  is  an  important  element  in  fixing 
transportation  charges  and  entitled  to  fair  consideration, 
but  is  not  alone  controlling  nor  so  applied  in  practice  by 
carriers,  and  the  value  of  the  service  to  the  property  car- 
ried is  an  essential  factor  to  be  recognized  in  connection 
with  other  considerations.  The  public  interests  are  not  to 
be  subordinated  to  those  of  carriers,  and  require 
proper  regard  for  the  value  of  the  service  in  the  apportion- 
ment of  all  charges  upon  traffic. 

"5.  A  difference  in  rates  upon  car-loads  and  less  than 
car-loads  of  the  same  merchandise,  Ijetween  the  same 
points  of  carriage,  so  wide  as  to  be  destructive  to  compe- 
tition between  large  and  small  dealers,  especially  upon 
articles  of  general  and  necessary  use,  and  which,  under 
existing  conditions  of  trade  furnish  a  large  volume  of 
business  to  carriers,  is  unjust  and  violates  the  provisions 
and  principles  of  the  act. 

"6.  A  difference  in  rate  for  a  solid  car-load  of  one  kind 
of  freight  from  one  consignor  to  one  consignee,  and  a  car- 
load quantity  from  the  same  point  of  shipment  to  the 
same  destination,  consisting  of  like  freight  or  freight  of 
like  character,  from  more  than  one  consignor  to  one  con- 
signee or  from  one  consignor  to  more  than  one  consignee, 
is  not  justified  by  the  difference  in  cost  of  handling. 

"7.  Under  the  official  classification  the  articles  known  in 
trade  as  grocery  articles  are  so  classified  as  to  discriminate 
unjustly  in  rates  between  car-loads  and  less  than  car-loads 
upon  many  articles,  and  a  revision  of  the  classification 
and  rates  to  correct  unjust  differences  and  give  these 
respective  modes  of  shipment  more  relatively  reasonable 
rates  is  necessary  and  is  so  ordered." 

The  efforts  which  the  commission  has  made  to  bring 
about  a  uniform  classification  throughout  the  country  are 
in  the  right  direction,  while  the  results  of  its  labor. are 
not  yet  satisfactory. 


Railroad  Ahnses.  157 


In  their  fifth  annual  report,  the  Commissioners,  after 
giving  an  account  of  their  etforts  and  tlie  shuffling  and 
double-dealing  of  the  railroad  companies  witli  tlicm  upon 
this  matter  of  uniform  classification,  said : 

"Its  conviction  remains  unchanged  that  tlie  necessi- 
ties of  commerce  require  tliat  tlie  existing  classifications 
be  consolidated,  and  that  this  result  should  be  accom- 
plished as  speedily  as  may  be  found  practicable ;  and  it 
does  not  feel  justified  in  asking  for  the  further  eft'orts  of 
the  carriers  the  same  measure  of  indulgence  which  from 
time  to  time  it  has  heretofore  suggested  should  be  ex- 
tended to  them,  and  which  was  thought  to  l>e  re([uired  in 
the  public  interest. 

"  The  commission  can  not  but  tliiuk  that  if  legislation 
to  that  end  be  enacted  by  Congress  tlie  carriers  will  speed- 
ily consummate  the  reform  already  begun  in  this  direction. 
It  is  therefore  recommended  that  an  act  be  passed  requir- 
ing the  adoption  within  one  year  from  the  date  of  its  pass- 
age of  a  uniform  classification  of  freight  by  all  the  carriers, 
subject  to  the  act  to  regulate  commerce,  and  providing 
that  if  the  same  be  not  adopted  within  the  time  limited, 
either  this  commission  or  some  other  public  authority  be 
required  to  adopt  and  enforce  a  uniform  classification. "' 

The  present  confusion  which  exists  in  the  classifica- 
tion and  rates  of  the  seventeen  hundred  railroad  organ- 
izations of  the  country  makes  it  difficult  for  the 
commission  to  do  justice  to  all  interests  and  localities. 
With  the  adoption  of  a  uniform  classification  it  is  to  be 
hoped  that  in  time  many  of  the  present  inequalities  will 
be  adjusted,  especially  if  an  intelligent  public  sentiment 
upon  the  subject  of  railroad  regulation  is  maintained.  A 
prominent  railroad  manager  in  the  East,  whose  devotion 
to  corporate  interest  is  only  equaled  by  his  political  am- 
bition, has  recently  made  repeated  efforts  to  convince  the 
people  that  railroad  abuses  are  things  of  the  past  and 
that,  if  any  such   abuses  still   linger  in  isolated  districts, 


158  Till'   luiilroad   Qiirsfi'on. 


they  are  simply  unavoidable  exceptions  to  the  rr.le  which 
will  soon  have  to  yield  to  the  general  spirit  of  fairness 
and  amity  for  which,  in  his  opinion,  the  railroads  have 
of  late  been  distinguished.  He  reasons  that  the  law  has 
fulfilled  its  mission,  that  the  railroads  have  reformed,  and 
that  it  now  behooves  the  people  to  relent  and  to  extend 
to  the  much  persecuted  corporations  the  hand  of  friend- 
ship and  good  will.  The  postprandial  eloquence  of  this 
gentleman  has  often  suavely  intimated  that  the  repeal  of 
the  Interstate  Commerce  Act  would  be  the  most  oppor- 
tune recognition  of  restored  confidence. 

Still  bolder  champions  of  the  railroad  cause  do  not  hes- 
itate to  demand  the  repeal  of  the  law.  It  is  not  likely 
that  the  sophistry  of  railroad  hirelings  will  triumph  over 
the  practical  logic  of  an  intelligent  public.  No  law,  be  it 
ever  so  wise,  can  in  the  space  of  a  few  j-ears  correct  all 
the  abuses  which  half  a  century  of  unbridled  railroad 
domination  has  developed.  Yet,  since  both  the  friends 
and  the  enemies  of  the  law  agree  that  it  has  been  par- 
tially successful  in  its  operation,  it  should  be  continued 
and  improved  to  keep  it  in  harmony  with  new  condi- 
tions and  a  progressive  public  sentiment.  It  is  claimed 
by  railroad  managers  that  the  adoption  of  a  uniform 
classification  will  remove  the  only  vestige  of  discrimina- 
tion still  left.  This  Is  not  true,  for  by  far  the  largest 
number  of  complaints  that  have  recently  been  brought 
before  the  Interstate  Commerce  Commission  charged  per- 
sonal and  local  discrimination  independent  of  any  ques- 
tion of  classification. 

It  is  shown  by  the  reports  of  the  commission  that  dis- 
criminations are  still  practiced  by  various  companies,  that 
annual  passes  are  still  illegally  issued  to  bribe  or  appease 
men  of  influence,  that  discounts  are  still   given  to   favor 


RdUroinl  AJmacs.  159 


shippers  under  various  pretexts,  tliat  some  large  rail- 
road centers  still  enjoy  more  favoraltle  rates  than  smaller 
towns,  and  that  the  lono-  and  short  haul  clause  of  the 
Intersttite  Commerce  Act  Is  still  violated  by  niilroad  com- 
panies. There  are  besides  these  scores  of  other  devices 
in  vogue  among  railroad  managers  to  subvert  the  prin- 
ciples of  the  common  law.  No  doubt  discriminations  are 
now  much  less  frequent,  and  are  possibly  the  exception 
where  but  a  few  years  ago  they  were  the  rule,  but  the  fact 
that  such  abuses  still  exist  is  a  strong  argument  for  the 
retention  of  the  law  as  well  as  for  the  necessity  of  con- 
tinued vigilance  on  the  part  of  the  people  and  those  espe- 
cially charged  with  the  execution  of  the  laws.  The  rail-. 
road  acts  of  Congress  and  the  various  States  ask  nothing  of 
common  carriers  but  just  and  equitable  treatment  for  all  their 
patrons.  If  this  is  freely  accorded,  these  laws  are  no  burden 
to  the  railroads.  If,  on  the  other  hand,  there  is  a  tendency 
on  the  part  of  the  railroads  to  resort  to  subterfuges 
and  evasions,  the  wholesome  restraint  of  the  statute  is 
absolutely  necessary  for  the  protection  of  the  shipper. 

The  repeal  of  the  Interstate  Commerce  Law,  or  the 
adoption  of  such  amendments  as  are  demanded  bj'  rail- 
road men,  would  be  interpreted  by  them  as  an  abandon- 
ment of  all  its  principles  and  would  inaugurate  an  era  of 
unprecedented  railroad  oppression.  History  evfer  repeats 
itself.  Unchecked  license  will  alwa3's  lead  to  arrogance 
and  despotism,  and  any  power  which  is  long  permitted  to 
defy  the  state  will  in  time  control  it.  It  is  not  likely 
that  the  people  of  the  United  States  can  be  induced  to 
demonstrate  to  the  world  that  democratic  government  is 
incapable  of  profiting  in  the  dear  school  of  experience. 

Our  railroad  legislation  contains  no  principle  that  is  not 
found   in   the   common  law.      Its  maxims  are  our  birth- 


160  Tlie  Railrodd    Question. 

right  and  will  be  the  birthright  of  our  children  and  chil- 
dren's children,  and  while  railroad  companies  may  be  able 
in  the  future,  as  they  have  been  in  the  past,  to  violate  the 
law  temporarily  with  impunity,  they  will  never  be  able  to 
prevail  upon  the  American  people  to  abandon  the  policy 
of  railroad  reform  which  the  passage  of  the  Interstate 
Commerce  Law  inaugurated. 

The  Interstate  Commerce  Commissioners  say  in  their 
sixth  annual  report: 

"Whoever  will  read  the  report  of  the  special  com- 
mittee of  the  United  States  Senate,  commonly  called  the 
'  Cullom  Committee,'  will  be  astounded  at  the  magnitude 
and  extent  of  railroad  abuses  brought  to  light  by  their 
investigation.  Those  unfamiliar  with  the  facts  made 
public  at  that  time  can  hardly  believe  the  outrages  which 
were  proven  to  exist  and  the  manifold  devices  by  which 
the  most  flagrant  injustice  was  perpetrated.  A  single 
illustration  will  furnish  a  better  reminder  than  extended 
comment. 

"It  appears  from  that  report  that  the  Standard  Oil 
Company,  in  one  instance  at  least,  boldly  demanded  from 
a  certain  railroad  that  its  shipments  should  be  carried  for 
10  cents  a  barrel;  that  all  other  shippers  should  be 
charged  35  cents  a  barrel  on  the  same  article,  and  that 
25  cents  of  the  35  paid  by  such  other  shippers  should  be 
handed  over  by  the  railroad  to  the  Standard  Oil  Compan}', 
and  the  j^enalty  threatened  for  non-compliance  with  this 
impudent  extortion  was  a  withdrawal  of  its  entire  busi- 
ness. 

' '  The  foregoing  statements  but  imperfectly  describe  the 
situation  which  existed  when  the  Interstate  Commerce 
Law  was  enacted.  In  any  reasonable  view  of  the  case  it 
was  too  much  to  expect  that  the  common  and  long  con- 
tinued abuses  of  railroad  management  could  be  corrected 
in  less  than  half  a  dozen  years,  or  that  the  first  scheme 
of  legislative  regulation  would  prove  adequate  to  that  end. 
It  would  be  contrary  to  all  experience  if  so  great  and 
radical  a  reform  could  be  thus  speedily  accomplished,  or 


Railroad  Abuses.  161 


if  the  initial  statute  should  be  found  sufficient  to  bring  it 
about.  The  law  was  the  outgrowth  of  an  aroused  and 
determined  public  sentiment,  which,  while  united  in  de- 
manding Government  interference,  was  divided  and  un- 
certain as  to  the  best  methods  of  affording  relief.  Like 
all  attempts  in  a  new  field  of  legislation,  the  statute  was 
a  compromise  between  divergent  theories  and  conflicting 
interests.  It  was  scarcely'  possible  that  it  should  be  so 
complete  and  comprehensive  at  the  outset  as  to  require 
no  alteration  or  amendment.  Those  who  are  familiar 
with  the  practices  which  obtained  prior  to  the  passage  of 
this  law  and  contrast  them  with  the  methods  and  condi- 
tions now  existing  will  accord  to  the  present  statute  great 
influence  in  the  direction  of  necessary  reforms  and  a  high 
degree  of  usefulness  in  promoting  the  public  interest. 

"Whoever  will  candidly  examine  the  reports  of  the  com- 
mission from  3'ear  to  year,  and  thus  become  acquainted  with 
the  work  which  has  been  done  and  is  now  going  on,  will 
have  no  doubt  of  the  potential  value  of  this  enactment 
in  correcting  public  sentiment,  restraining  injustice  and 
enforcing  the  principle  of  reasonable  charges  and  equal 
treatment.  Imperfections  and  weaknesses  which  could 
not  be  anticipated  at  the  time  of  its  passage  have  since 
been  disclosed  by  the  effort  to  give  it  effective  administra- 
tion. The  test  of  experience,  so  far  from  condemning 
the  policy  of  public  regulation,  has  established  its  import- 
ance and  intensified  its  necessity.  The  very  respects  in 
which  the  existing  law  has  failed  to  meet  public  expecta- 
tion point  out  the  advantages  and  demonstrate  the  utility 
of  Grovernment  supervision. 

' '  Moreover,  it  may  be  fairly  claimed  that  much  greater 
benefits  would  have  been  realized  had  the  statute  as  enacted 
expressed  the  evident  purpose  of  those  who  framed  it, 
and  received  a  construction  according  to  its  apparent  im- 
port. It  is  not  too  much  to  say  that  judicial  interpi'eta- 
tion  has  limited  its  scope  and  ascribed  to  it  an  intent  not 
contemplated  when  it  was  passed.  If  its  supposed  mean- 
ing, as  understood  at  the  time  of  its  passage,  had  been 
upheld  by  the  courts,  it  is  believed  that  its  opera- 
tion would    have    been    much    more    effective    and   its 


162  Thr   RalJroful  Question. 

usefulness  greatly  increased.  So  far  as  failure  has 
attended  the  efforts  to  give  it  proper  administra- 
tion, that  failure  can  be  mainly  attributed  to  differ- 
ences between  its  apparent  meaning  and  the  judicial 
interpretation  which  some  of  its  provisions  have  received; 
and  the  commission  is  of  the  opinion  that  if  the  pres- 
ent law  could  be  so  altered  as  to  express  clearly  and  be- 
yond doubt  what  it  was  evidently  intended  to  express  at 
the  time  of  its  enactment,  it  would  prove,  even  without 
other  amendment,  an  instrumentality  of  the  highest  value 
in  removing  the  evils  against  which  it  is  aimed. 

' '  The  specific  instances  in  which  the  statute  has  re- 
ceived judicial  construction,  and  the  limitations  upon  its 
scope  and  meaning  wiiich  the  courts  have  imposed,  will  be 
alluded  to  at  greater  length  in  another  part  of  this  report. 

' '  It  seems  proper,  however,,  to  observe  in  this  connec- 
tion that  the  effect  of  these  decisions  in  weakening  the 
law  and  preventing  its  enforcement  has  been  greatly  exag- 
gerated. The  impression  has  been  created  in  many  direc- 
tions that  judicial  construction  has  invalidated  the  essen- 
tial feature  of  tlie  statute  and  condemned  the  general 
principle  which  lies  at  its  foundation.  That  impression 
cannot  be  too  speedil}'  corrected,  for  nothing  has  been 
decided  which  permits  such  an  inference.  On  the  con- 
trary, neither  the  power  of  the  national  legislature  to  regu- 
late the  transportation  of  interstate  commerce  nor  the 
general  policy  of  the  existing  law  has  been  questioned  by 
any  tribunal. " 

Probabl}'  no  law  in  the  United  States  has  ever  before 
been  so  fiercely  attacked  at  all  of  its  vital  points  as  has 
this  law.  It  is  not  strange  that  among  the  great  number 
of  National  and  State  courts  the  railroad  companies 
have  found  occasionally  a  judge  ready  and  willing  to  assist 
them  in  breaking  it  down,  but  upon  the  whole  the 
judiciar}^  has  been  disposed  to  co-operate  with  other 
departments  of  the  G-overnment  in  their  efforts  to  secure 
effective  regulation  of  the  transportation  business. 


CHAPTER  VI. 


STOCK  AND  BOND  INFLATION. 


THE  complaint  is  frequently  heard  from  railroad  men 
that  our  freight  rates  are  too  low,  and  in  support 
of  it  the  statement  is  usually  made  that  the  greater  part 
of  the  railroad  stocks  of  the  United  States  pays  dividends 
considerably  smaller  than  the  average  interest  realized  by 
capitalists  on  money  loaned  or  invested  in  other  enter- 
prises. 

This  statement  may  be  true,  and  yet  it  is  valueless  as 
an  argument  for  higher  rates.  It  may  be  admitted  that 
the  dividends  declared  upon  the  face  values  of  railroad 
stocks  are  quite  moderate,  but  it  is  a  fact  too  well  authen- 
ticated to  be  contradicted  that  railroad  securities  repre- 
sent to  a  considerable  extent  only  fictitious  capital.  The 
public  concedes  that  liberal  returns  should  be  allowed  to 
railroad  companies  on  money  actually  invested,  but  it 
naturally  objects  to  being  taxed  for  the  purpose  of  mak- 
ing dividends  on  watered  stock.  The  evil  referred  to  is  a 
serious  one,  and  has  contributed  much  to  the  general 
demand  for  railroad  reform.  Most  of  the  early  roads  of 
this  country  were  built  for  the  accommodation  of  local 
traffic.  They  were  constructed  and  managed  by  business 
men  upon  business  principles.  The  stock  issued  by  the 
companies  was  in  most  cases  paid  for  in  full  and  was  not 
unfrequently  sufficient  for  the  completion  of  the  entire 
road,  and  no  incumbrance  was  permitted  by  the  owners 
to  be  placed  upon  the  property.  These  enterprises  as  a 
rule  proved  very   profitable.      One  of  the  first  roads  run- 

161 


164  The  Railroad    Question. 

ning  west  of  Chicago  will  serve  as  an   illustration.      The 
Galena  and  Chicago  Union  Railroad  Company  paid  a  10  per 
cent,  dividend  within  a  year  after  being  opened  to  traffic, 
and  gradually  increased  its  dividends  to  15,  20  and  22 
per  cent.      During  the  first  two  years  of  the  road's  oper- 
ation its  expenses  were  only  38^  per  cent,  of  its  earnings. 
During  the  second  year  the  company,  af ter  pay ing  a  1 5  per 
cent,  dividend,   diminished   its  debt  nearly  $60,000   and 
increased  its  surplus  $11,700.     In  1856  the  road  had  a 
length  of  232  miles,  on  which  the  gross  earnings  amounted 
to  $2,315,787.    This  revenue  exceeded  the  estimate  made 
by  the  company's  officers  the  year  previous  by  $300,000. 
In  his   annual   report  for  1856  the  president  of  the  com- 
pany said:      "  This  result  shows  an   increased  surplus  of 
$65,000,  after  paying  22  per  cent,  in  dividends  and  all 
expenses  and  interests  chargeable   to  income  account." 
The  report  also  shows  that  expensive  improvements,  such 
as  large  permanent  bridges  and  stone  culverts,  displacing 
as  a  rule  wooden  ones,  were  charged  to  current  expenses. 
The  financial   success  of  railroads  soon  attracted  the 
cupidity  of  financial  adventurers — men  of  great  energy, 
but  small  means — whose  aim  was   to  secure  the  greatest 
possible  returns  with  the  least  possible  outlay  of  money. 
With  the  introduction  of  these  elements  into  railroad  cir- 
cles the  era  of  speculation  commenced.      Take  the  line 
just  referred  to.      In   1852   the  average  number  of  miles 
operated  was  62,, and  the  year  following,  90.      But  while 
the    number   of    miles   operated  increased  less  than   50 
per  cent. ,  the  capital  stock  of  the  company  grew  from 
$444,193  to  $1,362,559,  and  its  debt  from  $60,145  to 
$542,287.      The  capitalization  of  the  road  was  thereby 
increased  from  $8,000  to  $21,000  per  mile,  and  this  was 
done  for  the  purpose  of  making  the  capital   appear  ade- 


SfocJ:  (Hid  Bond  Inflation. 


quate  to  its  earnings.  Nearly  all  railroads  became  in 
time  the  foot-balls  of  shrewd  manipulators.  The}'  were 
bonded  before  they  wore  constructed,  and  often  for  more 
than  the  value  of  the  completed  road.  Stocks  at  the  best 
only  represented  nominal  values  and  were  given  as  pre- 
miums to  the  bondholders  or  promoters  of  the  road. 

But  the  science  of  stock- watering  did  not  reach  its 
fullest  development  until  during  the  period  of  railroad 
consolidation.  Fictitious  values  were  now  created  as 
often  as  a  new  consolidation  took  place.  Watered  stocks 
and  bonds  were  watered  again  and  again,  until  they  repre- 
sented little  more  than  a  purely  imaginary  capital  upon 
the  basis  of  which  dividends  might  be  declared.  Take  the 
case  of  the  New  York  Central  and  Hudson  Kiver  Railroad 
companies,  wliich  consolidated  in  1869  with  a  capital  of 
$103,110,137.31.  The  former  of  these  roads  was  organ-' 
ized  in  1853  by  the  consolidation  of  ten  smaller  roads 
connecting  the  cities  of  Albau}'  and  Buffalo.  The  capital 
stock  of  these  companies  amounted  to  $20,799,800,  of 
which  $16,852,870  was  claimed  to  have  been  paid  in. 
Their  funded  debt  was  $2,497,526.  It  is  impossible  at 
this  day  to  ascertain  the  original  cost  of  all  these  roads, 
but  it  is  certain  that  the  above  sums  represent  about 
three  times  the  amount  actually  expended  for  their  con- 
struction. 

One  of  the  roads  entering  into  the  consolidation  was 
the  Utica  and  Schenectady.  It  was  78  miles  long  and 
formed  about  one-fourth  of  the  consolidated  line.  It  had 
the  heaviest  grading  and  rock-cutting,  was  the  best- 
equipped  and  undoubted!}'  the  most  expensive,  in  pro- 
portion to  its  extent,  of  the  ten  roads  out  of  which  the 
New  York  Central  was  created.  The  original  cost  of  this 
line  was  $2,000,000.     Bonds  were  never  issued   ]iy  the 


166  Thr   Railroad  Question. 

company.  The  line  was  profitable  from  the  very  begin- 
ning, paid  regularly  ten  per  cent,  dividends, — the  limit  to 
which  railroad  companies  were  then  restricted, —  and  had 
a  large  surplus,  which  it  expended  mainly  for  improve- 
ments. No  assessment  was  ever  made  on  the  stock 
beyond  the  $1,500,000  which  was  originally  paid  in  by 
the  shareholders  and  upon  which  they  had  drawn  regular 
and  liberal  dividends.  Taking  the  original  cost  of  this 
line  as  a  basis,  it  is  but  fair  to  presume  that  the  entire 
line  from  Albany  to  Buffalo,  covering  a  distance  of  297 
miles,  did  not  cost  to  exceed  $6,000,000.  These  roads, 
however,  entered  into  the  consolidation  with  a  capital 
stock  of  $15,274,800  and  a  bonded  indebtedness  of 
$1,696,326. 

Estimating  the  cost  of  the  branches  upon  the  same 
basis  upon  which  we  have  estimated  that  of  the  main  line, 
we  shall  find  that  the  total  original  cost  of  the  consoli- 
dated lines  cannot  have  exceeded  $8,000,000.  The  Mo- 
hawk Valle}'  road  was  put  in  at  $2,000,000  and  the  Syra- 
cuse and  Utica  direct  at  $600,000,  though  the  roads  only 
existed  on  paper  and  did  not  represent  any  value  what- 
ever. The  Schenectady  and  Troy  road,  which  went  into 
the  consolidation  with  $650,000  stock  and  $90,000  bonds, 
had  been  bought  for  less  than  $100,000  two  months  pre- 
vious to  the  consolidation. 

It  will  thus  be  seen  that  already  nearly  one-third  of  the 
stocks  and  bonds  of  the  consolidated  companies  was 
water.  The  consolidation  agreement  fixed  the  capital 
stock  of  the  New  York  Central  at  $23,085,600  and  its 
funded  debt  at  $11,564,033.62,  increasing  the  stock  over 
$2,000,000,  and  the  bonded  debt  over  $9,000,000.  The 
latter  was  more  than  quadrupled,  and  $8,000,000  worth 
of  bonds  were,  under  the  name  of  consolidation  certificates, 


Stock  and  Bond  Inflation.  167 


given  as  a  present  to  the  stockholders  of  the  new  road. 
The  capital  stock  of  the  New  York  Central  grew  steadilj- 
up  to  the  time  of  its  consolidation  with  the  Hudson  River 
road,  when  it  was  $28,795,000.  All  improvements  made 
during  this  time  were  paid  for  out  of  its  surplus  earnings, 
with  the  single  exception  of  the  Athens  branch,  for  which 
the  company  issued  $2,000,000  of  its  stock. 

The  gross  earnings  of  the  New  York  Central  in  1854 
were  $5,000,000,  and  its  net  earnings  $2,830,000.  In 
1863  its  gross  earnings  were  in  round  numbers  $10,000,- 
000,  and  in  1869  they  reached  $15,000,000.  The  divi- 
dends paid  during  that  year  amounted  to  $4,300,000,  and 
the  interest  to  $894,000.  In  view  of  the  fact  that  the 
bonded  indebtedness  of  the  road  was  from  two  to  three 
million  dollars  more  than  the  original  cost,  this  dividend 
of  15  per  cent,  upon  a  wholly  fictitious  capital  must  be 
regarded  as  an  unwarranted  tribute  levied  upon  the  com- 
merce of  the  country.  But  we  shall  soon  see  that  in  rail- 
road h^'draulics,  as  well  as  in  other  branches  of  human 
industry,  success  stimulates  to  still  greater  energ}'. 

The  Hudson  River  Railroad  Compan}'  was  organized  in 
1847.  It  extended  from  New  York  City  to  East  Albany 
and  was  144  miles  long.  There  are  no  data  extant  upon 
which  could  be  based  a  reliable  estimate  of  its  original 
cost.  Estimating  it  upon  the  basis  of  that  of  the  Utica 
and  Schenectady,  we  should  have  to  place  it  somewhat 
below  $3,000,000.  While  such  an  estimate  may  be  too 
low,  the  amount  of  its  funded  indelitedness  in  1851,  which 
was  $5,640,000,  probably  more  than  covers  the  amount 
actually  expended  in  the  construction  of  the  road.  In 
1851  the  capital  stock  of  the  Hudson  River  road  was 
$4,000,000.  In  1853  the  funded  debt  had  increased  to 
$7,000,000,  and   in   18(52    to   .$9,000,000.      In   1809   the 


168  The  Railroad    Question. 

bonded  indebtedness  had  decreased   to  $4,309,000,  but 
the  capital  stock  had  grown  to  over  $1G,  000, 000.    Between 
1853    and    1869    the   company   increased   its  stock  and 
bonded    hidebtedness    nearl}^     $11,000,000,     while    the 
assessments  paid  b_y  its  stock  and    bondholders    during 
this  time  did  not    exceed    $1,000,000.      Improvements 
were  made,  but  these  were  chiefly  paid  for  out  of  the  sur- 
plus earnings  of  the  road.      It  has  been  shown  by  experts 
that  $6,640,000  is  a  high  estimate  of  the  actual  original 
cost  of  the  Hudson  River  road  to  its  stock- and  bondhold- 
ers, and  that  securities  to  the  amount  of  more  than  $13,- 
000,000  represented  surplus  earnings  and  water.      At  the 
time  of  the  consolidation  of  the  Hudson  River  and  New  York 
Central  railroads  the  capital  stock  of  the   two  roads  had 
grown  to  $44,800,000.      Under  the  consolidation  agree- 
ment the  stock  was  fixed  at  $45,000,000.     The  new  com- 
pany also  assumed  all  the  bonded  and  other  indebtedness 
of  both  roads.      If  the   consolidation    manipulators    had 
paused  here,  the  capital  of  the  new  company  would  have 
been  somewhat  less  than  $60,000,000,  or  more  than  three 
times  the  cost  of  the  property.     But  the  road  was,  under 
existing  rates,    capable  of  earning  dividends  on  a  much 
larger   capital,    and    this    emergency    was    met    by   the 
issuance   of  consolidation  certificates   to   the  amount  of 
$45,000,000.      The  total  capital  of  the  road   was  thus 
increased  to  and  made  to  pa}'  dividends  on  over  $103,- 
000,000,  while  the  total  cost  of  the  road   and  its   equip- 
ment, as  claimed  by  the  company  in  1870,  was  less  than 
$60,000,000,    their  estimate  being  based  upon  assumed 
consolidation    values   and   the   expenditures   made  from 
surplus  earnings.      During  the  same  year  the  gross  earn- 
ings of    the  company  were  $22,363,320,   and  their  net 
earnings  $8,295,240.     In  1880   the  gross  earnings,  had 


/Stock  (iml  Bond  Inflation.  1G9 

\     « 

increased     to     133,175,913,     and     the     net     earnings 
to  $15,326,019.      The  company   was  able  to   declare  in 
that  year  11.82  per  cent,  dividend  on  its  $89,500,000  of 
fictitious  stock.      In  1890  its  gross  earnings  were  $37,- 
008,403,  or  $26,050  per  mile,  while  its  total  net  earnings 
were  $12,516,273.      The  gross  earnings  have  largely  in- 
creased during  the  years   1891    and  1892.      It  is  safe  to 
say  that  $2,000,000  per  annum  would  pay  very  liberal 
interest  and  dividends  on  the  amount  of  money  expended 
upon  the  construction  of  the  New  York  Central  and  Hud- 
son Kiver  Railroad  from  the  proceeds  of  its  bonds  and 
stocks.    B}^  the  creation  of  fictitious  values  the  managers  of 
the  company   have  attempted   to  impose  an   exorbitant 
tax  upon  the  commerce  and  travel  of  the  country  for  all 
time  to  come.      The  Government  guarantees  an  inventor 
a  monopoly  only  for  a  limited  space  of  time,  upon  the 
expiration  of  which  his  invention  becomes  the  common 
property  of  the  people;  but  railroad  managers  endeavor  to 
collect,  under  the  protection  of  our  laws,  an  exorbitant 
royalty  from  our  people  forever. 

The  case  of  the  New  York  Central  and  Hudson  River 
Railroad  Company  is  only  one  of  the  innumerable  instances 
oi  stock  watering  in  the  history  of  American  railroads. 
Indeed,  it  can  be  shown  that  stock-watering  reached  a 
still  higher  degree  of  development  in  the  case  of  the  Erie 
road.  It  has  been  demonstrated  that  the  actual  original 
cost  to  the  stock-  and  bondholders  of  the  New  York  Cen- 
tral Railroad  Company,  which  was,  with  its  branch  lines, 
593  miles  long,  did  not,  including  the  Athens  branch, 
exceed  $10,000,000.  Its  cost  to  its  owners,  in  1869,  in- 
cluding the  bonuses,  premiums,  commissions  and  fictitious 
equalization  values  of  several  transfers,  was  reported  by 
them  to  be  only  $37,600,000,  or  about  $63,400  per  mile. 


170  Th('  Railroad   Qiirsfi(j)i. 


At  about   the   same    time  the  main    stem  of   the  Erie 
Railway,  extending  from  New  York  to  Dunkirk,  a  dis- 
tance of  459  miles,  was  represented  by  a  capital  of  $108,- 
807,687,   or  $237,000  per  mile.      Considering  the    infe- 
riority of  this  road  to  the  New  York  Central,  we  are  forced 
to  the  conclusion  that  nearly  85  per  cent,  of   the  capital 
of  the  road  represented  water,  or,  in  other  words,  that  the 
commerce  of  the   United  States   was  taxed  to  pay  divi- 
dends on  about  $90,000,000  of  watered  securities.      In 
1863  the  Erie  Railroad   had  outstanding  $11,437,500  of 
common  stock.     In  1864  this  had  been  increased  to  $15,- 
693,000,  in  1868  to  $37,765,000,  and  in   1869   to   $70,- 
000,000.      Not   one-tenth  of   this  enormous  increase   of 
capital  was  ever  expended  on  the  property  of  the  road. 
The  stock  was  sold  at  from  20  to  40  cents  on  the  dollar, 
and  the   proceeds  disappeared   in   the   hands  of  its  man- 
agers.    To  what  extent  this  freebootery  'was  carried  will 
probably  never  be  known.      An  idea  of  the  rottenness  of 
the  Erie  management  may  be  had  from  the  fact  that  the 
courts  at  one  time  ordered  its  president  to  restore  to  the 
company  $9,000,000  of  diverted  securities,  which  order 
was  complied  with.      Vast  private  fortunes  were  amassed 
by  nearly  all  the  men  who  directed  the  affairs  of  the  road, 
and   the   mismanagement   became   in    time   so    notorious 
that  the  legislature  of  the   State  of  New  York   was  ap- 
pealed to,  to  remove  the   directors  of  the  road  for   the 
protection  of  its  stockholders,  and  to  reduce  the  capital 
stock  of  the  company  to  the  amount  actually  paid  for  it. 
This  movement  failed,  however,  because  it  was  opposed 
by  the  very  stock liolders  whose  interests  were  supposed  to 
have  suffered  by  directorial  mismanagement.      They  pre- 
ferred to  continue  to  draw  dividends  on  the  face  value  of 
stocks  which  tbey  had  purchased  at  20  cents  on  the  dollar. 


iStock  and  Bond  Iiijlation.  171 


The  capitalization  of  the  company  has  since  been  in- 
creased to  $163,679,825,  and  it  is  by  no  means  a  secret 
among  those  familiar  with  raih'oad  values  that  the  bonded 
indebtedness  of  the  Erie  road  represents  alone  many  mil- 
lions more  than  the  total  amount  that  was  ever  invested 
in  the  property. 

The  principal  competitor  for  through  traffic  of  the  two 
companies  whose  financial  operations  we  have  just  reviewed 
is  the  Pennsylvania  Central  Company.  It  has  often  been 
asserted  1)y  the  managers  and  friends  of  this  company 
that  its  capital  is  free  from  water;  but  this  is  not  true. 
In  1864  a  dividend  of  14,130,760  was  made  out  of  the 
surplus  earnings  of  the  road.  This  dividend  was  pa^'able 
in  capital  stock  and  was  equal  to  30  per  cent,  of  the  then 
outstanding  capital.  Similar  surplus  dividends,  each 
equal  to  5  per  cent,  of  the  company's  outstanding  stock, 
were  declared  in  18G7  and  1868.  The  people  were  thus 
taxed  to  pay  dividends  on  a  capitalized  surplus  which  had 
been  derived  from  excessive  charges  previously  imposed 
on  them.  I  shall  not  attempt  here  to  determine  whether 
the  capital  represented  by  the  Pennsylvania  Eailroad  Com- 
pany has  been  honestly  invested.  A  committee  of  Con- 
gress has  expressed  the  opinion  that  the  capitalization  of 
its  main  line  exceeds  the  amount  of  the  actual  cost  of 
the  property  by  more  than  eleven  million  dollars.  There 
is,  however,  a  S3'stem  of  inflation  practiced  by  the  Penn- 
sylvania Railroad  Company  which  is  simply  a  new  form  of 
bond  and  stock  watering.  More  than  one- half  of  the 
capital  of  this  company  has  l^een  invested  in  the  stocks 
and  bonds  of  other  corporations.  In  1801  the  amount  so 
invested  was  $154,319,240,  and  the  income  derived  from 
it  $4,852,181.  This  does  not  only  cause  the  stocks  and 
bonds  of  certain  companies  to  be  c(KUited   twice,'  but  ex- 


172  The  Railroad  Question. 

acts  a  double  tax  from  the  commerce  of  the  country, 
interests  and  dividends  upon  the  same  capital  being  paid 
both  to  the  bond-  and  stockholders  of  the  Pennsylvania 
Central  and  to  the  bond-  and  stockholders  of  the  roads  in 
whose  securities  it  has  made  investments.  The  income  of 
the  company  is  thus  swelled  far  bej'ond  the  amount  which 
the  traffic  reports  indicate.  It  will  be  seen  that,  to  per- 
petuate extortionate  rates,  this  process  of  manifolding 
securities  might  be  continued  indefinitely. 

The  cost  to  its  stock-  and  bondholders  of  the  Baltimore 
and  Chicago  line  of  the  Baltimore  and  Ohio  Railroad, 
which  has  a  length  of  795  miles,  was  estimated  by  the 
company's  officers  at  about  $57, 000, 000.  The  actual  cost 
of  this  road,  owing  to  its  expensive  mountain  grades,  was 
probably  greater  than  that  of  any  of  the  other  through 
lines  between  the  sea-coast  and  Chicago,  but  there  can  be 
no  doubt  that  the  capitalization  of  this  road  represents 
from  one-half  to  one-third  pure  water.  At  the  time  of 
the  completion  of  this  road  to  Chicago  the  surplus  earn- 
ings of  the  company,  after  the  paj^meut  of  interest  and 
dividends,  amounted  to  over  $29,000,000.  This  had  been 
charged  to  "profit  and  loss  "and  used  in  the  construction 
of  branch  lines.  Thus  an  amount  equal  to  more  than  half 
of  the  reported  cost  of  this  line  had  at  the  time  of  its 
completion  been  returned  to  its  owners  in  other  railroad 
values. 

The  Select  Senate  Committee  on  Transportation  Boutes 
to  the  Seaboard  in  1874  estimated  the  excess  of  the  capi- 
tal over  actual  cost  of  the  Erie  road,  from  New  York  to 
Dunkirk,  at  $68,807,000;  that  of  the  New  York,  Lake 
Shore  and  Michigan  Southern  line  to  Chicago  at  $115,- 
188,137,  and  that  of  the  Pennsylvania  and  Fort  Wayne  line 
to  Chicago  at  $11,290,374.      If  this  estimate  was  correct 


StocJi  and  BoikI  Inflation.  173 


the  entire  over-capitalizatiou  of  these  lines,  on  which  the 
commerce  between  the  West  and  the  East  was  forced  to 
pay  a  dividend  of  8  and  10  per  cent,  per  annum,  was  no 
less  than  $195,000,000.  The  committee  assumed  the  act- 
ual cost  of  these  roads  to  be  $182,000,000,  or  about  $78,- 
000  per  mile.  They  based  their  estimate  upon  the  cost  of 
the  main  branch  of  the  Baltimore  and  Ohio,  as  reported  by 
their  officers,  supposing  it  to  represent  the  actual  outlay 
made  by  its  stock-  and  bondholders.  Various  revela- 
tions which  have  since  been  made  to  the  public,  as 
to  the  real  cost  of  railway  construction,  justif}'  the  belief 
that  the  estimated  cost  of  $78,000  per  mile  for  those  roads 
is  far  too  high.  Mr.  Henry  Poor,  several  3'ears  ago,  esti- 
mated the  average  cost  of  the  roads  of  the  United  States 
at  $30,000  a  mile.  Making  allowance  on  one  hand  for 
Mr.  Poor's  tendency  to  favor  the  railroad  side  of  the 
question,  and  on  the  other  hand  for  the  more  expensive 
grades,  double  tracks  and  better  terminal  facilities  of 
these  trunk  lines,  $50,000  per  mile  ma}'  be  considered  a 
fair  estimate  of  their  average  cost.  Upon  this  basis  the 
total  cost  of  the  three  lines  in  question  would  amount  to 
$116,450,000,  and  the  excess  of  their  capital  over  actual 
cost  would  be  the  enormous  sum  of  $261,000,000,  or  325 
per  cent,  of  their  actual  cost,  and  probabl)'^  not  less  than 
400  per  cent,  of  the  original  cost  to  their  stock-  and 
bondholders.  The  capital  of  these  companies  has  since 
been  considerably  increased,  to  enable  their  managers  to 
increase  their  dividends,  and  with  it  the  tax  levied  upon 
the  commerce  of  the  country. 

These  are  only  a  few  of  the  many  instances  of  stock 
watering  that  might  be  mentioned.  In  fact,  there  are 
to-day  very  few  railroads  in  the  United  States  that  are 
entirely  free  from  it.      It  is  a  notorious    fact  that  the 


174  The  Railroad  Question. 

stock  of  a  large  numl)er  of  railroad  cpmpanies  represents 
little  or  no  value,  having  either  been  sold  at  a  mere  nomi- 
nal price  or  been  donated  as  a  premium  or  bonus  to  those 
who  purchased  a  large  amount  of  the  company's  bonds. 
In  recommending,  in  his  December,  1891,  annual  message, 
Government  aid  for  the  Nicaragua  Canal,  President  Har- 
rison said :  ' '  But  if  its  bonds  are  to  be  marketed  at  heavy 
discounts  and  every  bond  sold  is  to  be  accompanied  by  a 
gift  of  stock,  as  has  come  to  be  expected  by  investors  in 
such  enterprises,  the  traffic  will  be  seriousl}^  burdened  to 
pay  interest  and  dividends."  It  is  not  difficult  to  surmise 
to  what  enterprises  the  President  referred.  It  has  for 
man}^  years  been  a  well-settled  principle  among  railroad 
incoilDorators  that  no  larger  assessments  should  be  made 
upon  the  stockholders  than  is  necessary  to  float  the  com- 
pau3''s  bonds.  A  company,  for  fnstance,  is  organized  with 
a  capital  stock  of,  say,  $1,000,000.  Five  percent,  of  this 
sum,  or  $50,000,  is  paid  in  to  defray  preliminary  expenses. 
The  road  is  then  bonded  for  perhaps  $2,000,000, 
but  as  the  bonds  are  sold  for  only  80  per  cent,  of  their 
face  value  and  as  the  incorporators  allow  themselves  5  per 
cent,  for  the  negotiation  of  the  bonds,  only  $1,500,000  is 
realized  for  the  construction  of  the  road.  The  incorpor- 
ators now  vote  to  themselves  a  contract  to  construct  the 
road  for  $1,500,000  and  at  once  sublet  it  to  a  contractor 
who  is  ready  and  anxious  to  build  the  road  for  $1, 200, 000. 
The  incorporators  thus  realize  $1,000,000  Avorthof  stock, 
tt  portion  of  which  is  unloaded  upon  unsophisticated  in- 
vestors, and  $300,000  in  cash,  at  an  outlay  of  $50,000; 
and  the  road,  which  cost  $1,200,000,  is  made  to  pay  inter- 
est and  dividends  on  a  total  capital  of  $3, 000, 000,  and 
this  is  subsequently  watered  indefinitely  if  the  road  proves 
profitable  or  a  consolidation  with  some  other  road  justifies 


iSfoiJc  (111(1  Bond  Tiijlattoii.  175 

the  belief  that  its  earning  capacity  might  be  increased. 
Xor  is  this  an  overdrawn  pictnre.  On  the  contrary', 
instances  might  be  cited  where  only  one-half  of  one  ))or 
cent,  of  the  compan3''s  stock  was  paid  in  l)y  the  share- 
holders. 

In  the  days  of  inflation  such  transactions  did  not  seem 
to  seriousl}'  art'ect  railroad  securities.      P]veu  when  they 
were  no  longer  a  secret  to   the  public,  stocks  and  bonds 
sold  readil}',  because,  owing  to  the  large  earnings  of  the 
roads,  this  class  of  investments  was  unusually  productive. 
In  1868  the  earnings  of  the  railroads  of  Massachusetts 
averaged  $15,400  a  mile,  and  were  equal  to  38  per  cent, 
of  the  total  reported  cost  of  all  the  lines  of  the  State.     The 
Chicago,  Burlington  and  Quincy  earned  $15,386  per  mile 
in  1867,  and  paid  a  15  per  cent,  dividend.    Its  stocks  were 
quoted  100  per  cent,  above  pai*.     In  1807  the  Lake  Shore 
Railroad  earned  more  than  50  per  cent.,   and  the   Terre 
Haute  and  Indianapolis  even  as  much  as  57.2  percent,  of 
the  amount  of  its  cost.      Previous  to  the  war  the  inflation 
of  railroad  securities  was,  as  a  rule,  confined  to  the  stock. 
Where  roads  were  bonded  for  more  than  the  cost  of  con- 
struction it  was,   with  but  very  few  exceptions,  done  to 
ma,ke  their  capital  to  correspond  with  their  earning  capac- 
ity, or  rather  to  divert  public  attention  from  the  fact  that 
the  rates  in  force  had  outlived  their  reasonableness.     It 
was  reserved  to  the  Union  Pacific  and  the  Central  Pacific 
companies  to  bond  their  roads  from  the  beginning  to  an 
amount    equal   to   twice   their  actual  cost,    or,    in  other 
words,  to  virtually  receive  them  as  a  present  from  the 
Federal  Government,  bond  them  for  all  the}^  were  worth, 
and,  in  addition,  issue  stock  to  an  amount  largely  in  ex- 
cess of  the  cost  of  construction,  and  then  try  to  earn 
interest  and  dividends  on   the  whole  amount  of  securities 


176  The   Railroad   Qiirstio)}. 


issued.  The  history  of  these  companies  forms  so  inter- 
esting and  instructive  a  chapter  in  the  railroad  annals  of 
America  that  a  short  s3'nopsis  of  it  may  not  seem  out  of 
place  here. 

The  charter  of  the  Union  Pacific  Eailroad  Company  was 
granted  by  Congress  on  the  first  day  of  July,  1862. 
Shortly  after  the  beginning  of  the  "War  of  the  Rebellion  it 
was  made  to  appear  to  the  country  that  a  transcontinental 
'.'oad  was  a  national  necessity;  that  without  it  we  could 
not  hope  to  retain  long  the  Pacific  Coast.  It  was  also 
very  plausibly  argued  that  the  political  benefits  to  be  de- 
rived by  the  country  from  the  construction  of  such  a  road, 
as  well  as  its  great  length  and  extraordinary  cost,  made  it 
the  duty  of  the  nation  to  aid  liberally  its  enterprising  and 
patriotic  promoters  in  the  prosecution  of  their  gigantic 
task.  In  those  stirring  times  few  people  were  inclined  to 
question  the  motives  of  those  who  advocated  what  ap- 
peared to  be  patriotic  measures,  or  to  be  penurious  in  the 
expenditure  of  public  funds  when  the  public  weal  seemed 
to  demand  such  expenditure. 

The  Union  Pacific  Railroad  charter,  which  in  substance 
was  passed  by  Congress  as  it  had  been  drafted  by  the 
promoters  of  the  enterprise,  gave  to  the  new  company  the 
right  of  way  through  the  public  lands,  and  authorized  it  to- 
take,  from  the  lands  adjacent  to  the  line  of  its  road,  earth, 
stone,  timber  and  other  materials  for  its  construction.  It 
further  granted  to  the  company-  every  alternate  section  of 
land  to  the  amount  of  five  alternate  sections  per  mile  on 
each  side  of  its  line,  excepting  only  those  lands  to  which 
preemption  or  homestead  claims  attached  at  the  time  when 
the  line  of  the  road  should  be  definitely  fixed.  In  addi- 
tion to  these  donations  the  United  States  issued  to  the 
company  subsidy  bonds  in  an  amount  equal   to  $16,000 


Sforh-  ,1)1(1  BoikI  III  flat  ion.  177 


per  mile  for  the  distauce  from  the  Missouri  River  to  the 
eastern  line  of  the  Rocky  Moimtains,  $48,0OU  per  mile  for 
a  distance  of  150  miles  through  the  Rocky  Mountains,  and 
$32,000  per  mile  from  the  western  base  of  the  Rocky 
Mountains  to  the  terminus  of  the  road.  iSimilar  franchises 
were  at  the  same  time  given  to  the  Central  Pacific  Rail- 
road Company,  a  corporation  which  had  previously  been 
chartered  by  the  State  of  California.  Besides  its  grant  of 
right  of  way,  land',  timber,  etc.,  this  company  received 
subsidy  bonds  at  the  rate  of  $1G,000  a  mile  for  a  distance 
of  7.18  miles  east  of  Sacramento,  of  $48,000  a  mile  for 
150  miles  through  the  Sierra  Nevada,  and  of  $32,000  a 
mile  for  the  distance  from  the  eastern  base  of  that  mount- 
ain range  to  its  junction  with  the  Union  Pacific.  The 
charters  of  the  two  companies  provided  that,  to  secure  the 
repa3'ment  to  the  United  States  of  the  amount  of  those 
bonds,  they  should  ipso  facto  constitute  a  first  mortgage 
on  the  entire  lines  of  the  road,  together  with  their  rolling 
stock,  fixtures  and  other  property.  The  franchises  and 
donations  thus  granted  by  Congress  were  most  valuable; 
in  fact,  the  latter  were  alone  sufficient  to  build  and  equip 
the  roads.  In  spite,  however,  of  the  liberal  grants  and  in 
spite  of  the  urgent  necessity  of  the  roads  in  those  years  of 
national  trial,  both  of  these  enterprises  made  ver}''  slow 
progress.  Their  promoters  were  men  of  small  means,  and 
the  capitalists  to  whom  they  appealed  for  help  failed  to 
realize  the  value  of  the  franchises.  No  doubt  when  these 
men  first  engaged  in  their  cause  they  expected  to  encounter 
serious  obstacles  in  Congress,  supposing  that  that  august 
body  would  consider  the  proposed  measure  with  much 
deliberation  and  to  act  upon  it  with  still  more  circum- 
spection. Their  success  greatly  surprised  them.  Tiie}' 
made  the  discovery  that  members  of  Congress  could  be 


178  TliP  Railroad    Question. 


imposed  upon  as  easily  as  private  citizens,  and  wlien  tliey 
fully  realized  how  readil}'  their  demands  had  been  granted, 
they  were  greatly  provoked  at  themselves  because  they 
had  not  asked  for  more. 

According  to  a  story  told  ])y  m}'  old  friend  Mr.  J.  0. 
Crosby,  an  experienced  member  of  the  brotherhood  of 
tramps  late  one  afternoon  chanced  to  stroll  into  the  city 
of  Alton.  Having  no  visible  means  of  support,  he  was 
picked  up  by  the  police  and  brought  before  the  Mayor  to 
oive  an  account  of  himself  and  to  be  dealt  with  as  that 
dignitar}'  might  see  fit.  The  tramp,  a  printer  by  profes- 
sion, and  by  no  means  a  tyro  in  meeting  such  emergen- 
cies, so  managed  to  impress  the  Mayor  with  his  superior 
accomplishments  that  the  latter  concluded  it  would  be  a 
good  investment,  both  for  himself  and  the  city  over  which 
he  presided,  to  offer  the  genial  stranger  a  contribution  to 
his  traveling  fund,  upon  the  condition  that  he  would  no 
longer  than  absolutely  necessary  molest  the  city  with  his 
presence.  He  accordingly  told  the  intercepted  tourist 
that  while  it  had  been  for  j'ears  the  policy  of  the  city  and 
its  officials  to  entertain  all  tramps  found  within  the  limits 
of  Alton  for  thirty  daj's  at  the  city  jail  in  exchange  for  a 
fair  amount  of  labor,  he  would,  in  consideration  of  the 
apparent  fact  that  he  was  of  better  metal  than  the 
aA'erage  tramp,  make  an  exception  in  his  case,  and  would, 
even  at  the  risk  of  being  censured  for  it  by  his  constitu- 
ents, hand  over  to  him  five  dollars  from  the  municipal 
funds  if  lie  would  agree  to  leave  the  city  early  next  morn- 
ing. The  tramp  gladly  accepted  the  proposition,  replen- 
ished his  empty  purse  with  the  proffered  bounty  and  with- 
drew from  the  City  Hall,  to  take  a  stroll  through  Main 
Street.  The  city  seemed  to  him  as  prosperous  as  the 
Mayor  had   shown   himself  liberal.      It   occurred  to  the 


Sfock  cmd  Bund  Lijhitiou.  179 


itinerant  typographer  that  its  treasury  would  not  have 
been  the  worse  otf  for  a  teu-doUar  levy,  and  he  hastily 
returned  to  the  Mayor's  office  to  plead  for  a  larger  dona- 
tion. The  Ma3-or,  not  disposed  to  argue  the  question, 
handed  him  another  five-doHar  bill  and  improved  the  op- 
portunity' to  remind  him  of  his  previous  promise  and  to 
give  expression  to  the  hope  tliat  as  a  gentleman  of  honor 
he  would  now  discharge  his  obligation.  The  tramp  fairly 
overwhelmed  His  Honor  with  assurances  of  good  faith  and 
bade  him  an  affectionate  good-by.  The  next  rising  sun 
found  him  on  his  onward  journey.  His  route  led  through 
Alton  on  the  Hill,  a  portion  of  the  city  which  he  had  not 
seen  before.  He  viewed  with  surprise  the  many  fine  resi- 
dences and  other  evidences  of  opulence  which  this  part  of 
the  city  contained.  He  passed  on  in  a  pensive  mood  until 
he  reached  the  summit  of  the  hill,  which  commanded  a 
fine  view  of  the  entire  city.  Plere  he  turned  to  cast  a 
farewell  glance  over  the  town  ruled  over  by  the  most  gener- 
ous mayor  that  it  had  ever  been  his  privilege  to  meet.  As 
he  beheld  before  him  the  fine  homes  and  beautiful  yards, 
and  below  in  the  valley  the  lofty  church-steeples,  the 
many  school-houses,  the  massive  business  blocks,  the  long 
and  well-paved  streets  and -the  spacious  and  shad}'  parks, 
an  expression  of  mingled  surprise  and  disappointment 
stole  over  his  face.  He  thrice  slapped  his  wrinkled  brow 
and  thun  hurriedly  retraced  his  steps  down  the  hill.  When 
the  chief  magistrate  of  Alton  came  to  his  office  that  morn- 
ing, he  met  the  irrepressil)Ie  tramp  anxiously  waiting  for 
him  at  the  door.  "Mr.  Ma^'or, "  said  the  wily  extortioner, 
"I  acted  very  hastily  j'esterdaj^  when  I  accepted  your 
second  proposition.  You  have  here  a  much  larger  town 
than  I  ever  supposed.  I  have  been  constrained  to  take 
our  last  agreement  into   reconsideration,  and  I  shall  not 


180  The   Railroad  Qifestion. 

leave  this  point  until  you  add  another  five  dollars  to  your 
consideration.  You  can  certainly  better  afford  to  do  that 
than  to  throw  away  thirty  days'  board  and  the  ten  dollars 
which  you  have  already  paid  me  besides." 

The  diplomacy  of  the  Union  Pacific  and  Central  Pacific 
railway  companies  was  the  same  as  that  of  the  Alton 
tramp.  They  had  found  Congress  as  generous  as  the 
tramp  had  found  the  Mayor  of  Alton,  and  now  reproached 
themselves  for  their  modesty  and  resolved  to  bring  the 
pliability  of  Congress  to  a  severer .  tes.t.  Thej"  again 
appeared  before  that  body  in  186-1  and  asked  that  their 
charter  be  so  amended  as  to  grant  to  them  ten  alternate 
sections  instead  of  five  on  each  side  of  the  road,  and  also 
all  the  iron  and  coal  found  within  ten  miles  of  their  track, 
which  had  previously  been  reserved  by  Congress.  And  in 
addition  to  this  the}'  asked  that  the}'  be  authorized  to 
issue  their  own  mortgage  bontis  on  their  respective  roads 
to  an  amount  equal  to  the  bonds  of  the  United  States, 
and  that  the  lieu  of  the  United  States  bonds  be  made  sub- 
ordinate to  the  lien  created  by  the  companies'  bonds.  By 
the  act  of  Congress,  July  2,  1864,  all  these  demands 
were  granted,  and  the  two  companies  were  thus  virtually 
presented  with  their  roads  and  were  at  the  same  time 
given  permission  to  mortgage  this  gift  of  the  people  and 
divide  the  proceeds  among  their  shareholders,  many  of 
whom  had  received  their  stock  chiefly  in  consideration  of 
their  influence  in  and  out  of  Congress.  The  contribution 
of  the  United  States  to  these  companies  on  account  of 
their  main  lines  has  not  been  far  from  $80,000,000,  of 
which  over  $52,000,000  was  paid  in  bonds,  and  the 
remainder  in  lands,  which  aggregated  about  23,000,000 
acres.  The  whole  line  from  Council  Blufi's  to  Sacramento 
is  1,780  miles  long.    It  will  thus  lie  seen  that  the  national 


Stock  and  Bond  Infl((tinii.  181 

contribution  was  about  $45,000  per  mile,  besides  the  right 
of  way  and  all  timber,  iron  and  coal  found  within  ten 
miles  of  the  road.  There  is  no  doubt  that  this  contribu- 
tion was  equal  to,  if  it  did  not  exceed,  the  actual  cost 
of  the  road.  There  has  been  an  erroneous  impres- 
sion abroad  which  has  likened  the  Pacific  road  to  those 
wonderful  and  very  expensive  lines  which  cross  the  Andes 
and  the  Alps.  Those  who  have  not  crossed  the  continent 
can  hardly  believe  that  the  construction  of  this  line  was 
neither  more  difficult  nor  more  expensive  than  that  of  any 
of  the  numerous  railroads  crossing  the  mountain  ranges  of 
the  East,  but  such  is  the  fact. 

Starting  from  Omaha,  the  Union  Pacific  follows  for 
nearly  500  miles,  or  almost  half  of  its  entire  length,  the 
valley  of  the  Platte  River.  A  better  route  for  a  railroad 
cannot  be  found  upon  the  western  continent.  There  are 
between  Omaha  and  Cheyenne  but  three  bridges  worthy  of 
the  name.  The  Platte  Valley  is  almost  straight,  rising 
toward  the  west  at  a  nearly  uniform  rate  of  about  10  feet 
to  the  mile.  Grading  was  practically  unnecessary,  and  the 
work  of  construction  consisted  of  little  more  than  the  lay- 
ins:  of  the  ties  and  track.  From  the  base  of  the  moun- 
tains  at  Chej'enne  to  their  summit  is  a  distance  of  about 
thirty-two  miles,  the  difference  in  altitude  between  the 
two  points  being  less  than  2,200  feet.  The  average  grade 
is  therefore  about  68  feet  to  the  mile,  and  nowhere  are 
the  grades  heavier  than  80  feet  to  the  mile.  There  are 
heavier  grades  than  these  in  the  prairie  State  of  Iowa,  and 
the  mountain  grades  of  a  number  of  Eastern  roads  exceed 
those  of  the  Union  Pacific  by  from  30  to  40  feet  to  the 
mile.  The  rise  is,  if  not  uniform,  at  least  gradual,  and 
the  construction  of  even  this  portion  of  the  road  required, 
therefore,  neither  great  engineering  skill  nor  any  unusual 


182  The  Railroad  Question. 

expenditure  of  money.  The  road  now  crosses  a  plateau 
which  extends  almost  to  the  terminus  of  the  Union  Pacific 
at  Ogden,  and  a  very  large  portion  of  this  is  as  favorable 
for  a  road-bed  as  the  average  railroad  territory  of  the 
country. 

The  route  of  the  Central  Pacific  presented  to  the  engi- 
neer no  great  obstacles  between  Ogden  and  the  State  line 
of  California,  the  only  elevation  of  any  note  to  be  sur- 
mounted being  the  Humboldt  Mountains  in  Nevada.  Their 
highest  point,  Humboldt  Wells,  is  221  miles  west  of 
Ogden,  and  has  an  elevation  of  5,650  feet  above  the  level 
of  the  sea,  while  that  of  Ogden  is  4,320  feet.  Upon  an 
average  the  grades  of  this  portion  of  the  road  do  not  differ 
from  those  found  in  the  Mississippi  Valley.  The  portion 
of  the  Central  Pacific  Railroad  which  traverses  the  Sierra 
Nevada  is  the  most  expensive  of  the  whole  line,  but  the 
cost  of  construction  did  not,  even  on  this  division,  exceed 
the  amount  contributed  for  it  by  the  Federal  Government; 
for  the  statement  is  made  upon  good  authority  that  a 
few  of  the  leading  promoters  of  the  road  bijilt  the  first 
western  section  of  twentj-  miles  with  their  own  capital,  of 
less  than  $200,000,  and  a  loan  from  the  city  of  Sacramento 
and  Placer  County,  amounting  to  $550,000.  and  then  drew 
$848, 000  Government  subsidy,  or  more  than  enough  to 
build  the  second  section  and  draw  another  installment  of 
the  subsid}';  and  that  they  repeated  the  operation  until 
the  whole  line  was  completed.  These  men  were  in  such 
haste  to  realize  the  profits  which  their  undertaking  prom- 
ised them  ^that  they  did  not  even  take  sufficient  time  to 
make  a  proper  survey  of  their  line.  Had  they  done  so,  a 
great  saving,  botii  in  the  construction  and  in  the  subse- 
quent operation  of  the  road,  might  have  been  effected.  It 
is  now  well  known  that  a  route  could  have  been  found 


Stock  and  Bond  Inflation.  183 

through  the  Sierra  Nevada  Mountains,  not  far  distant  from 
the  route  chosen,  which  would  have  saved  800  feet  in 
elevation  and  at  least  25  per  cent,  in  the  expense  of 
grading. 

It  is  certainl}'  safe  to  sa)'  that  if  less  than  forty  thousand 
dollars  a  mile  was  sufficient  to  construct  the  road  through 
the  Sierra  Nevadas  the  Federal  contribution  of  $50, 000, 000 
for  the  entire  line,  from  Omaha  to  San  Francisco,  left,  after 
the  completion,  a  respectable  surplus,  either  to  the  com- 
panies or  those  of  their  members  who  had  the  construction 
contract,  and  that  the  $75,000,000  of  capital  stock  and 
the  $55,000,000  of  first  mortgage  bonds  which  the  two 
companies  issued  were  a  gigantic  dividend  to  the  stock- 
holders, for  which,  practically,  no  consideration  was  given. 

The  companies  might  well  have  been  satisfied  with  the 
Government's  generosity,  but  their  success  in  imposing 
upon  Congress  stimulated  their  greed.  The  act  of  1864 
provided  that  the  charge  for  Government  transportation 
over  these  roads  should  be  applied  to  the  liquidation  of 
its  bonds,  and  that  after  the  completion  of  the  lines  five 
per  cent,  of  their  net  earnings  should  likewise  be  so 
applied.  When  the  Secretary  of  the  Treasury,  under  the 
law,  refused  to  pay  them  the  amount  earned  by  Govern- 
ment transportation,  and  in  addition  to  this  demanded 
the  five  per  cent,  of  their  net  earnings  in  liquidation  of 
their  debt,  the  companies  applied  to  Congress  to  again 
amend  their  charters  so  as  to  relieve  them  for  the  time 
being  from  any  direct  payment  of  either  principal  or 
interest  of  the  Government  bonds,  and  to  make  it  the 
duty  of  the  Secretary  of  the  Treasury  to  pay  to  the  com- 
panies in  money  one-half  of  the  compensation  allowed  to 
them  by  law  for  services  performed  for  the  Government. 
And  again  Congress  responded  to  their  demands,  grant- 


184  The  Railroad  Question. 

ing  them,  by  a  rider  to  the  army  appropriation  bill,  passed 
March  3,  1871,  all  the  relief  asked  for.  Owing  to  the 
policy  of  the  managers  of  the  Pacific  line  to  pay  as  little 
of  the  interest  on  the  Government  subsidy  debt  as  is  abso- 
lutely necessary  to  prevent  foreclosure  proceedings,  the 
unpaid  interest  has  accumulated  until  it  now  almost  equals 
the  amount  of  the  original  indebtedness.  The  last  report 
of  the  Commissioner  of  Railroads  shows  that  the  total 
indebtedness,  principal  and  interest,  to  the  United  States 
of  the  Pacific  railroad  companies,  was  $114, -1:90, 000  on 
July  1,  1892.  The  Commissioner  seems  to  be  of  the  opin 
ion  that  the  Union  Pacific  Company  will  not  be  able  to 
pay  the  subsidy  bonds  at  maturity,  and  he  urges  that 
some  step  be  taken  in  the  matter  by  Congress,  whether  it 
be  to  extend  the  loan,  which  will  mature  within  the  next 
six  yeai's,  or  to  sell  the  road.  The  managers  of  the 
Pacific  roads  and  their  friends  ask  an  extension  of  the 
Government  subsidy  bonds  for  fifty  years,  and  a  reduction 
of  interest  from  6  to  2  per  cent.  If  Congress  continues  to 
be  servile  to  these  interests,  the  Pacific  railroad  lobby  will 
secure  just  such  legislation  as  they  demand. 

At  the  time  the  Pacific  roads  were  built  the  people  of 
the  United  States  had  no  adequate  knowledge  of  the  topog- 
raphy of  the  Territories,  and  the  promoters  of  the  road 
for  a  while  found  it  a  difficult  task  to  convince  capitalists 
th&,t  the  investment  would  be  a  safe  one.  That  they 
knew  the  value  of  the  projected  road  was  shown  by  the 
contest  between  the  Central  Pacific  and  the  Union  Pacific 
for  mileage.  For  a  distance  of  over  200  miles  the  two 
companies  graded  roads  side  by  side  in  contest  for  the 
Government  subsid}'. 

The  promoters  were  even  disappointed  in  the  cost  of 
the  roads,  as  Mr.  Sidney  Dillon  states  in  an  article  pub- 


Stock  and  Bond  Tnjiation.  185 

lisbed  in  the  August  number  of  Scrihner's  Magazine, 
1892,  in  which  he  says: 

"  At  the  end  of  1867  the  road  was  completed  to  the  top 
of  the  mountains  and  nearly  half  way  to  Salt  Lake  City. 
The  cost  of  building  over  the  mountains  was  so  much  less 
than  we  had  expected  that  the  construction  company  found 
itself  with  a  surplus  from  the  proceeds  of  the  subsidy 
bonds.      This  was  imprudently  distributed  in  dividends." 

The  United  States  Government  could  parallel  to-da}" 
the  line  of  either  road  for  less  than  the  amount  of  its 
first  mortgage  bonds,  and  its  subsidy  bonds  are  therefore 
nearly  worthless. 

Mr.  Clews,  in  his  ' '  Twenty- Eight  Years  in  Wall  Street, " 
says: 

"After  the  Thurman  bill  had  been  sustained  by  the 
Supreme  Court  Mr.  Gould  had  a  plan  to  build  a  road 
from  Omaha  to  Ogden,  just  outside  the  right  of  way  of 
the  Union  Pacific,  and  give  that  road  back  to  the  Govern- 
ment. It  would  give  others  '  a  chance  to  walk. '  The 
Government  tried  to  squeeze  more  out  of  the  turnip  than 
was  in  it.  For  $15,000,000  a  road  could  be  built  where 
it  had  cost  the  Union  Pacific  $75,000,000." 

It  may  be  admitted  that  the  Pacific  roads,  even  at  an 
extravagant  cost,  have  proved  a  good  investment  for  the 
country,  5'et  their  history  reflects  severely  on  the  states- 
manship of  those  members  of  Congress  whose  duty  it  was 
to  properly  protect  the  interests  of  the  nation  at  that  time. 
They  were  unequal  to  their  task. 

The  Great  Northern  Eailway  Company  has  just  com- 
pleted its  road  to  the  Pacific  Coast.  Its  line  is  very 
direct,  and  it  has  unusually  light  curvature  and  low  grades, 
which  will  enable  it  to  be  operated  more  cheaply  than  any 
Pacific  line  yet  constructed.  Much  of  its  route  is  through 
a  rich  and  productive  country,  insuring  to  it  a  heavy  local 
business. 


186  The    Jldilrodd    Qucstio)i. 

The  following  statistics  concerning  it  are  given  in  the 
Railioay  Age  : 

Total  mileag-e,   December  18,   1890 . .    . .     2,850 

Average  bonded  debt  per  mile $18,C36  75 

Average  stock  per  mile 7,015  67 

Total 25,652  42 

Interest  charges  per  mile   1,005  76 

Dividend  charges  per  mile 420  94 

A  comparison  of  these  figures  with  those  corresponding 
of  other  transcontinental  lines  is  instructive,  and  is  com- 
mended to  Congressmen  who  have  to  deal  with  the  Union 
Pacific  and  Central  Pacific  questions. 

Stock  and  bond  inflation,  it  may  confidently  be  asserted, 
has  created  from  five  to  six  thousand  millions  of  dollars  of 
fictitious  railroad  capital.  In  1890  the  average  liabilities  of 
the  railroads  in  the  United  States,  including  the  capital  stock 
and  the  funded  and  unfunded  debt,  were  $63,600  per 
mile.  According  to  Mr.  Poor's  estimate  of  the  average 
cost  of  American  railroads  per  mile,  more  than  50  percent, 
of  this  vast  sum  is  pure  water.  But,  as  has .  been  stated 
before,  Mr.  Poor  is  partial  to  the  railroad  interest,  and  his 
estimate  of  $30,000  a  mile  is  too  high  for  the  time  at 
which  it  was  made.  Furthermore,  railroad  building  has 
since  then  been  materially  cheapened.  Tens  of  thousands 
of  miles  of  road  have  been  built  in  recent  years  that  did 
not  cost  to  exceed  $10,000  a  mile.  Very  recently  the 
Union  Pacific  Railroad  Company  proved,  before  the  Board 
of  Equalization  at  Salt  Lake  City,  by  the  testimony  of 
engineei's,  that  the  average  cost  per  mile  of  the  Utah 
Central  line  was  only  $7,298.20,  itemized  as  follows  : 

Engineering     $    300  00 

Grading  5-ft.  fill,   18,480  yds 2,310  00 

Ties,  2,640,  at  30  cts 792  00 

Rails,  82  tons 1,845  00 


JSfock  (DhI  Baud  Injlatlon.  187 

Splices 12  00 

Bolts 24  GO 

Spikes 142  20 

Track-laying GOO  00 

Bridg-es 200  00 

Station-building- 100  00 

Fences 450  00 

Right  of  Avay 720  00 

$7,298  20 
In  a  recent  article  Mr.  C.  Wood  Davis  states  that 
' '  many  auxiliary  lines  have  been  built  at  costs  ranging  from 
$8,000  to  $15,000  per  mile,  and  capitalized  at  two,  three, 
four,  and  even  five  times  their  cost,  as  in  the  case  of  the 
107  miles  of  the  Kansas  Midland,  costing,  including  a 
small  equipment,  but  $10,200  per  mile,  of  which  30  per 
cent,  was  furnished  by  the  municipalities  along  its  line. 
Yet,  with  construction  profits  and  other  devices,  this  road 
shows  a  capitalization  of  $53,000  per  mile.'' 

And  that  ' '  the  Missouri  Pacific  line  from  Eldora  to 
McPherson,  Kansas,  a  comparatively  expensive  prairie 
road,  being  located  across  the  line  of  drainage,  cost  much 
less  than  $10,000  per  mile,  as  have  thousands  of  miles  of 
other  prairie  roads.'' 

•  It  is  safe  to  say  that  $25,000  is  a  liberal  estimate  of 
the  avei'age  cost  per  mile  of  American  roads  to  the  stock- 
and  bondholders,  and  that  their  capitalization  represents 
$38,000  of  water  per  mile.  The  total  net  earnings  of  the 
railroads  of  the  country  were  $341,666,639  in  1890,  and 
$356,227,883  in  1891,  upon  an  actual  investment  of  onl}^ 
about  $4,250,000,000.  This  is  a  return  of  about  8|-  per 
cent,  and  shows  the  force  of  Mr.  Poor's  statement  that,  if 
the  water  were  squeezed  out  of  railroad  securities,  no 
better-paying  investment  could  be  found  in  the  country. 
We  often  see  references  to  the  fact  that  no  dividends 


188  The.  Railroad  Question. 


are  paid  upon  a  large  portion  of  railroad  stocks,  but  there 
is  no  reason  why  dividends  should  be  paid  upon  many  of 
them,  as  they  represent  no  capital  whatever  that  has  gone 
into  the  road.  It  is  probable  that  not  to  exceed  ten  cents 
on  the  dollar  upon  an  average  was  originall}'  paid  for  these 
stocks,  and  the  $80,000,000  distributed  annually  as  divi- 
dends upon  them  does  not  vary  much  from  fifteen  to 
twenty-five  per  cent,  upon  the  amount  actually  invested 
in  them. 


CHAPTER  VII. 


COMBINATIONS. 


IT  is  the  favorite  argument  of  railroad  men,  and  the 
writer  must  confess  that  he  himself  formerly  believed, 
that  if  all  legal  restraints  were  removed  from  railroad 
business,  the  laws  of  trade  would  regulate  it  more  success- 
fully anfl  more  satisfactorily,  both  to  the  railroad  com- 
panies and  their  patrons,  than  the  wisest  statutes  could 
ever  regulate  it.  To  give  force  to  their  argument,  they 
cite  the  old  Democratic  maxim  that  that  State  is  governed 
best  which  is  ruled  the  least.  They  al^o  assert  that  it  is 
the  proAince  of  the  State  to  guarantee  to  each  of  its 
citizens  industrial  freedom ;  to  permit  him  to  transact  any 
legitimate  business  according  to  his  best  jucigment;  to  buy 
and  to  sell  where  and  at  what  price  he  pleases ;  in  short,  to 
earn  without  restriction  the  reward  of  his  intelligence  and 
his  industry.  They  further  contend  that  under  a  free 
government  the  law  of  suppl}'^  and  demand  should  be 
allowed  free  sway,  and  that  he  who  buys  or  sells  trans- 
portation should  not  be  hampered  in  his  transactions  any 
more  than  the  grocer  and  his  customer. 

The  reply  to  this  is  that,  while  the  grocer  is  a  natural 
person,  the  railroad  company  is  an  artificial  person,  and 
that,  while  the  business  of  the  former  is  purel}'  private, 
that  of  the  latter  is  quasi-public.  The  grocer  must  rely 
solely  upon  his  personal  rights  and  private  resources,  but 
the  railroad  company  accepts  from  the  State  the  franchises 
which  enable  it  to  do  business.  And  yet,  if  the  public  had 
any  assurance  that  the  laws  of  trade  would  regulate  both 

189 


190  Till'   RaiJ/'ond   Question. 


kinds  of  business '  alilfe,  it  is  not  likely  that  the  State 
would  distinguish  between  the  two.  They  claim  that  their 
business  is  like  other  private  business,  and  therefore  they 
should  be  let  alone ;  that  competition  can  be  relied  upon 
to  correct  abuses;  and  where  competition  does  actually 
exist  they  forget,  and  then  claim  that  their  business  is  not 
like  other  private  business,  and  they  should  be  allowed  to 
make  pools  and  combinations,  because  in  their  business 
competition  is  ruinous.  Experience  has  certainly  demon- 
strated that  competition  is  only  possible  where  combina- 
tion is  impossible.  Where  the  same  commodity  is  sup 
plied  by  a  large  number  of  individuals,  there  is  but  little 
danger  for  the  public  from  those  who  supply  it,  for  an 
agreement  among  many  cannot  easily  be  effected;  and 
even  if  an  understanding  could  1)e  reached,  it  would  not 
long  be  satisfactory  to  all  parties.  Disagreements  would 
arise  which  would  end  in  the  dissolution  of  the  combina- 
tion. Where,  however,  the  number  of  competitors  is 
small,  agreements  can  be  easily  effected  and  successfully 
maintained. 

It  is  doubtful  whether  there  is  at  present  any  interest  in 
the  commercial  world  which  has  a  greater  tendency  to  mon- 
opoly and  combination  than  the  railroad  interest.  There  are 
in  the  United  vStates  some  40,000  railroad  stations.  Not 
more  than  4,000  of  these  are  junctions  of  two  or  more 
roads.  At  90  per  cent,  of  these  stations  shippers  are  there- 
fore confined  to  one  line  of  railroad,  and  are,  in  absence 
of  State  regulation,  compelled  to  pay  for  transportation 
whatever  price  tlie  companies  may  l)e  disposed  to  charge, 
subject  only  to  such  restrictions  as  the  proximity  of  com- 
peting points  may  impose.  If  competition  obtained  at  all 
points  where  two  or  more  roads  meet,  many  railroad  com- 
panies could  not  afford  to  charge  excessive  rates  at  non- 


Comhiiiatiuits.  I'Jl 

competitive  points  along  their  lines  of  road,  for   such'  a 
polic}'  would   slowly   but  surely  drive  a  large  volume  of 
their  legitimate  business  to  rival  roads,  to  whose  interest 
it  would  be  to  encourage   by  every  means  in  their  power 
such  diversion  of  traffic.      Railroads  early  recognized  this 
fact  and  took  steps  to  enable  each  line  to  control  its  local 
business.      The    first    combinations  among   railroad  com- 
panies to  control  prices  at  competitive   points  were  rather 
crude;  in  fact,  much  cruder  than  the  first  Granger   legis- 
lation.     The}^  were  simple  agreements  among  the  various 
roads  touching  a  common  point  to   maintain  certain  fixed 
rates.      But  while  each  road  was  anxious  to  have  the  rates 
agreed  upon  main|;ained  l)y  all  of   its  rivals,   it  cared  but 
little  about  maintaining  its  own  good  faith,  and  it  improved 
every  opportunit}'  to  get  business  at  reduced  rates  so  long 
as  it  could  reasonabl}'  hope  to  escape  detection.      As  soon 
as  any  of  the  competing  roads,    through  the  falling-off  of 
its  business,  Ijecame   convinced  that  it  was  the  victim  of 
overreaching  rivals,  it  retaliated   by   offering  still  lower 
rates  to  close-tongued  shippers.    This  tricky  rivalry  would 
be  continued  until  the  animosity  engendered   b}'  it   would 
lead  to  an  open  rupture,  and  what  railroad  men  are  pleased 
to  term  a  rate  war  would  follow.      As  the   schedule  rates 
had  before  been  unreasouabl}'  high,    so  they  became  now 
unreasonably  low.    Hostilities  would  be  continued  until  all 
belligerents  became  exhausted  and   manifested  a  disposi- 
tion to  negotiate  a  treaty  of  peace.    The  former  high  rates 
would  then  be  restored;  the  compact  was  carried  out  for 
a  short  time,  to  be  again  violated  and   finally  annulled. 
These  rate  agreements  were   in  vogue  in  New   England 
before  the  War  of  the  Rebellion  and  gradually  found  their 
way  to  the  Middle  States  and  the  West.      Wherever  they 
were  tried  they   were  violated,  until  even  among  the  most 


192  The  Railroad  QuestioH. 

unsophisticated  of  freight  agents  a   rate  agreement  was 
looked  upon  as  a  farce- 

The  statement  is  often  made  by  railroad  managers  that 
excesses  in  railroad  competition  are  the  result  of  the  pecu- 
liar conditions  of  their  business,  which  has  heavy  fixed 
charges  on  one  hand  and  a  fickle  patronage  on  the  other; 
that  the  uncertainty  of  through  business  compels  them  to 
rely  upon  the  local  business  for  such  revenue  as  is  neces- 
sary to  meet  these  fixed  charges;  and  that,  inasmuch  as 
their  trains  must  run,  and  anj^  through  freight  hauled  by 
them  is  so  much  business  taken  from  the  enemy,  they  can 
better  aflford  to  take  it  at  any  price  than  to  have  one  of 
their  competitors  take  it. 

It  is  difficult  to  see  why  this  reasoning  should  not  be 
applied  to  other  branches  of  business;  for  instance,  to 
milling.  The  mill-owner,  like  the  railroad  company,  has 
heavy  fixed  charges.  He  has  to  earn  the  interest  on  his 
capital,  he  has  to  keep  his  mill  in  repair,  he  now  and  then 
has  to  meet  the  demands  of  the  times  and  purchase 
improved  appliances,  and  he  has  to  keep  a  certain  number 
of  employes,  whether  business  is  brisk  or  slack.  He 
might,  therefore,  if  he  saw  fit  to  employ  the  logic  of  rail- 
road managers,  earn  revenue  enough  to  meet  his  fixed 
charges  from  the  business  which  his  regular  customers 
give  him,  and  then  do  any  business  coming  from  beyond 
this  circle  at  any  price  rather  than  surrender  it  to  a  rival. 
It  will  readily  be  conceded  that  any  enterprise  con- 
ducted on  such  principles  could,  at  the  best,  flourish  only 
temporarily,  for  it  would  soon  encounter  difficulties  from 
two  sources.  Its  local  customers,  thus  discriminated 
against,  would  withdraw  their  patronage,  while  its  com- 
petitors, finding  their  territory  encroached  upon,  would, 
in  self-defense,  offer  still   lietter  terms  to  the  puljlic  to 


Combinations.  193 


regain  their  lost  customers.  Such  ruinous  competition,  if 
long  persisted  in,  must  necessarily  cripple,  if  it  does  not 
bankrupt,  a  majority  of  those  who  engage  in  it.  It  is 
fortunately  as  rare  in  industrial  and  commercial  circles  as 
it  is  common  among  public  carriers. 

This  difference  can  easily  be  accounted  for.      Where 
there  are  a  large  number  of  competitors  the  prices  of   the 
commodities   supplied   by   them   are  leveled  down  until 
thej^  reach  a  point  where  they  will  afford  only  a  reasonable 
margin  of  profit,  and  beyond  which  they  will  cease  to  be 
profitable,  and  will  therefore  cease  to  be  supplied  until 
the  equilibrium  is  again  established.      Where,   however, 
the  number  of  competitors  is  small,  the  price  of  the  com- 
modities supplied  by  them  will,  by  agreement,  for  a  time 
at  least,  be  maintained  at  a  point  where  it  affords  con- 
siderable more  than  a  reasonable  profit.      Here  the  large 
gain  presents  to  the  various  competitors  such  a  tempta- 
tion to  outstrip  their  rivals  and  increase  their  business  at 
the  expense  of  good  faith,  that  but  few,  if  an}^,  of  them 
will,  in  the  long  run,  resist  it.     The  tendency  to  under- 
bid rivals  will  always  be  strong  where  profits  are  large, 
and  it  may  safely  be  asserted  that  efforts  to  maintain, 
through  combinations,  excessive  rates  are  the  most  fruit- 
ful source  of  ruinous  competition. 

In  time  railroad  managers  became  convinced  that, 
unless  it  was  possible  to  radically  reform  railroad  ethics, 
rate  agreements  could  never  be  relied  upon  for  the  main- 
tenance of  excessive  rates  at  competing  points.  The 
combined  roads  found  it  an  easy  matter  to  agree  upon 
excessive  rates,  but  were  powerless  to  enforce  them. 
Experience  convinced  their  managers  that  to  make  their 
tariffs  effective  it  was  necessary  to  deprive  indiAidual 
roads  of  the  power  or  the  inducement  to  cut  below   the 


194  7V"     lidiliuad    Questiun. 


agreed  rates.  Their  ingenuity  in  time  developed  a  sys- 
tem wliich  promised  to  remove  from  individual  roads 
ever}'  temptation  to  take  business  at  less  than  schedule 
prices.  This  device  consists  in  a  division  of  railroad  busi- 
ness and  is  commonly  called  a  pool.  There  are  various 
ways  in  which  such  a  division  is  made.  Either  the  traffic 
is  divided  among  the  various  companies  meeting  at  a 
common  point,  or  each  road  is  allowed  to  carry  all  freights 
that  it  may  receive,  and  then  the  earnings  of  the  differ- 
ent roads  are  divided,  each  road  being  paid  the  actual 
cost  of  such  service  as  it  has  performed.  There  is  still  a 
third  pooling  arrangement,  consisting  in  a  division  of  ter- 
ritory, but  this  has  been  found  less  satisfactory  and  is 
now  but  rarely  resorted  to. 

It  is  said  that  the  first  regular  pool  organized  in  the 
United  States  was  the  Chicago-Omaha  pool,  formed  in 
1870  by  the  Chicago,  Burlington  and  Quincy,  the  Chicago, 
Rock  Island  and  Pacific,  and  the  Chicago  and  Northwestern 
railroad  companies,  then  the  only  three  lines  connecting 
the  cities  of  Chicago  and  Omaha.  This  pool,  which  was 
subsequently  joined  by  other  lines,  made  an  equal  division 
of  the  traffic,  and  was  so  well  organized  that  it  lasted 
fourteen  years  "without  a  break."  The  abuses  practiced 
by  the  companies  Ijelonging  to  this  pool  were  one  of  the 
chief  causes  of  the  Granger  movement  in  Iowa.  It  is  in- 
deed doubtful  whether  any  other  railroad  combination  ever 
maintained  itself  longer  or  pursued  its  ends  with  greater 
pertinacity  than  this  pool.  Another  pool  of  national 
notoriet}^  was  the  Southern  Railway  and  Steamship  Asso- 
ciation, which  was  organized,  though  at  first  under  a 
different  name,  in  the  State  of  Georgia,  in  1875.  It  was 
probably  the  first  money  pool  formed  in  the  United  States. 
Each  member  was  awarded  a  certain  percentage  of  the 


Combinations.  195 

tx)tal  business  between  the  various  competitive  points 
along  its  line.  If  a  company  carried  more  than  its  share, 
it  was  compelled  to  turn  over  the  receipts  from  such 
additional  traffic  to  its  rivals,  which  paid  it  a  nominal 
price  for  carriage.  This  allowance  was  always  made  so 
low  that  there  was  no  inducement  for  any  company  to 
seek  to  carry  more  than  its  allotment.  The  pool  had  its 
own  executive,  legislative  and  judicial  departments,  and 
it  enforced  its  decrees  with  an  iron  hand.  It  maintained 
a  strong  centralized  government,  and  rebellious  members 
had  but  little  mercy  to  expect  from  it.  It  provided  that 
if  any  officer  or  representative  of  any  company  should 
authorize  or  promise,  directly  or  indirectl}',  any  variation 
from  established  tariffs,  he  should  be  discharged  from  the 
service,  with  the  reason  stated.  Tlie  strong  sentiment 
which  we  to-day  find  in  the  South  in  favor  of  State  con- 
trol of  railways  is  the  direct  result  of  the  many  evils 
which  this  powerful  pool  introduced  into  the  railway  busi- 
ness of  that  section  of  the  country. 

Other  pools  followed,  as  the  Southwestern  Association, 
organized  in  1876,  to  control  the  traffic  between  Chicago 
and  St.  Louis,  and  the  Minnesota  and  the  Colorado  pools. 
Within  a  few  years  railroad  pools  covered  the  whole 
country.  All  pursued  the  same  object,  viz.,  the  control 
of  rates  at  competitive  points,  which  enabled  the  com- 
panies to  maintain  excessive  schedule  rates  at  local 
points. 

Between  1875  and  1880  the  pooling  sj'stem  rapidly 
spread  all  over  the  Union.  Wherever  competition  prom- 
ised to  regulate  rates  by  the  application  of  the  law  of 
supply  and  demand,  the  pool  was  resorted  to  as  the  never- 
failing  remedy  to  preserve  dividends  on  watered  stock. 
As   long   as   lake    and   canal    navigation    controlled    the 


196  The  Railroad    Question. 

carriage  of  heavy  freights  between  Chicago  and  New  York 
by  means  of  rates  so  low  that  railroads  found  it,  or  at 
least  thought  it,  impossible  to  compete  with  them  in  the 
transportation  of  agricultural  products  during  the  greater 
part  of  the  year,  railroad  pools  between  Chicago  and  New 
York  could  not  be  successfully  maintained.  In  1873  the 
railroads  transported  only  about  30  per  cent,  of  this  kind 
of  freight  from  the  West  to  Eastern  ports. 

Owing,  however,  to  the  rapid  decrease  of  the  cost  of 
transportation,  railroad  companies  from  this  time  on  were 
enabled  to  encroach  rapidly  upon  the  business  of  water 
routes,  so  that  in  1876  they  carried  over  52  per  cent,  of 
the  entire  volume  of  agricultural  products  that  were  moved 
from  the  West  to  the  East.  As  long  as  these  products 
were  carried  almost  entirely  by  water  from  lake  ports  to 
the  East,  New  York,  as  the  terminus  of  this  route,  enjoyed 
decided  advantages  over  the  other  Atlantic  ports.  When, 
however,  the  railroads  commenced  to  successfully  compete 
with  the  water  routes  in  the  transportation  of  these  com- 
modities,  a  considerable  share  of  this  business  was  diverted 
to  Boston,  Philadelphia  and  Baltimore,  and  it  soon  became 
apparent  that  these  ports,  in  some  respects,  enjoyed  ad- 
vantages for  the  export  trade  not  possessed  by  New  York. 
It  was,  therefore,  not  surprising  that  the  business  men  of 
these  cities,  together  with  the  railroads  terminating  in 
them,  made  every  effort  to  come  in  for  their  share  of  the 
traffic  which  was  drifting  away  from  New  York. 

Competition  between  the  New  York  Central  and  the 
Pennsylvania  Railroad  for  the  Western  through  traffic 
dated  back  as  far  as  1869,  the  year  in  which  both  systems 
secured,  through  consolidation  with  connecting  roads, 
through  lines  to  Chicago.  Rates  fell  in  one  year  from 
$1.80  to  25  cents  per  hundred  pounds.      After  a  time  the 


Combinations.  197 


managers  of  the  two  companies  met,  and  schedule  I'ates 
were  restored.  Rates  were,  at  least  outwardlj^,  main- 
tained until  the  Baltimore  and  Ohio  and  the  Erie  system 
entered  Chicago,  and  the  Grand  Trunk  made  connections 
with  Milwaukee  and  other  lake  points,  and  thus  disturbed 
through  rates.  All  efforts  to  maintain  the  level  of  the  old 
tariffs,  through  agreements,  proved  now  fruitless,  for  both 
the  Baltimore  and  Ohio  and  the  Grand  Trunk  found  it  to 
their  interest  to  pursue  independent  policies,  and  refused 
to  have  their  hands  tied  b}'  an  agreement  with  roads  that 
were  interested  in  continuing,  if  possible,  the  commercial 
supremacy  of  New  York. 

Rate  skirmishing  finally  developed  into  open  war  in 
1876,  when  fourth-class  rates  between  Chicago  and  the 
Atlantic  fell  as  low  as  16  cents  per  hundred.  This  rate, 
however,  was  eclipsed  in  Jul}^  1878,  when  wheat  was 
carried  from  Chicago  to  New  York  for  10  cents  per  hun- 
dred. The  existing  conditions  left  no  doul)t  in  the  minds 
of  those  familiar  with  railroad  tactics  that  this  war  was 
simply  the  precursor  of  a  gigantic  combination  between 
the  trunk  lines.  An  unsuccessful  attempt  to  effect  such 
a  combination  had  been  made  before  In  1874  the  man- 
agers of  the  Erie,  Pennsylvania  and  New  York  Central 
met  at  Saratoga  for  the  purpose  of  devising  means  for 
the  suppression  of  competition  in  the  trunk  line  traffic. 
This  meeting,  however,  known  in  railroad  history  as  the 
Saratoga  Conference,  was  the  first  step  toward  the  organ- 
ization of  a  trunk  line  pool,  although  the  conference  did 
not  lead  to  any  immediate  results,  the  Grand  Trunk  and 
the  Baltimore  and  Ohio  refusing  to  be  bound  by  its  decis- 
ion. It  was  certainl}'  no  easy  task  to  devise  means  to 
bring  about  an  effective  and  permanent  combination 
among  five  large  through  lines  with  greatly  conflicting 
interests. 


198  The  Railroad  Question. 

So  far  pools  had  never  failed  to  suppress  competition 
wherever  they  were  organized.  But  in  the  past  pools 
had,  almost  without  exception,  only  attempted  to  control 
rates  between  common  points.  They  accomplished  their 
object  by  a  division  of  the  entire  traffic  or  earnings  from 
the  traffic  between  common  points.  The  schedule  rat«s 
remained  the  same  for  all.  But  the  traffic  of  the  trunk 
lines  brought  a  new  factor  into  the  problem.  Here  the 
rival  routes  did  not  terminate  at  the  same  points.  It  was 
contended  by  the  Baltimore  and  Ohio  that,  whatever  might 
be  the  facilities  of  Baltimore  for  exporting  agricultural 
products,  that  port  was  at  a  disadvantage  as  compared  with 
the  more  northern  ports  on  account  of  the  longer  voyage 
and  higher  ocean  rates  to  Liverpool,  and  that  it  could 
therefore  not  enter  into  a  combination  with  the  roads 
leading  directly  to  New  York  and  Philadelphia  upon 
equal  terms,  since  this  would  divert  its  legitimate  share 
of  the  through  business  to  those  ports.  The  Grand 
Trunk,  on  the  other  hand,  refused  to  enter  the  combi- 
nation because,  not  having  any  direct  Chicago  connection, 
it  feared  that  the  enforcement  of  pool  rates  would  mater- 
ially diminish  the  volume  of  its  business.  As  yet  the 
railroad  wiseacres  did  not  seem  to  be  equal  to  the  emer- 
gency, and  matters  drifted  along  in  the  old  channel.  The 
rate  war  of  1876  gradually  brought  about  an  understand- 
ing among  the  belligerents.  The  competing  roads  ac- 
cepted the  terms  offered,  and  with  this  a  new  principle 
entered  into  the  science  of  pooling.  Eates  between  Chi- 
cago and  Baltimore  were  fixed  somewhat  lower  than  those 
between  Chicago  and  Philadelphia,  and  in  turn  Philadel- 
phia was  allowed  a  small  advantage  over  New  York.  This 
concession  was  made  to  equalize  the  difference  in  the 
ocean  rates  of  the  competing  ports.     These  equalizing  or 


Combinations.  199 


— to  use  railroad  nomenclature — differential  rates  were 
subsequently^  granted  by  pools  to  such  roads  as,  on 
account  of  some  disadvantage,  could  not  compete  with 
other  members  of  the  pool  on  equal  terms.  Thus  the 
longest  route  was  usually  permitted  to  charge  the  lowest, 
and  the  shortest  route  the  highest  rate.  This  practice  is 
in  conformity  with  the  principle  of  charging  whatever  the 
traffic  will  bear,  but  it  is  certainly  devoid  of  every  con- 
sideration of  justice  and  equity.  If  the  longer  line  can 
afford  to  carry  freight  at  rates  lower  than  schedule  prices, 
no  further  proof  is  needed  under  ordinary  circumstances 
that  the  regular  schedule  rates  of  the  shorter  line  are 
exorbitant. 

The  concession  of  differential  rates  settled,  at  least 
temporarily,  the  difficulties  that  had  arisen  out  of  the 
east-bound  traffic  of  the  trunk  lines.  This  arrangement 
did  not,  however,  in  any  way  affect  the  traffic  moving  in 
the  opposite  direction.  The  volume  of  west-bound  freight 
is  ver}'  much  larger  at  New  York  than  at  any  other  of  the 
Atlantic  ports.  In  order  to  get  its  share  of  the  business, 
each  trunk  line  maintained  an  office  in  New  York.  These 
offices  eagerly  solicited  business  for  their  respective  roads, 
and  the  freights  which  they  received  for  transportation  to 
the  West  would  be  forwarded  either  directly  or  by  a  cir- 
cuitous route ;  but,  the  longer  the  route,  the  lower  as  a  rule 
was  the  compensation  asked  for  the  service.  Under  these 
circumstances  competition  was  brisk,  and  the  profits 
realized  were  far  from  satisfying  the  cupidity  of  the  com- 
peting lines.  It  was  apparent  to  their  managers  that  the 
competition  in  the  west-bound  traffic  was  similar  to  that 
formerly  existing  between  Chicago  and  Mississippi  and 
Missouri  River  points,  which  had  promptly  yielded  to 
pools.    The  temporar}'  adjustment  of  the  more  perplexing 


200  The  RaUroad    Question. 

questions  which  had  arisen  out  of  the  east-bound  traffic 
now  paved  the  way  for  a  pooling  arrangement  for  the 
west-bound  freight.  The  Southern  Pool,  under  the  man- 
agement of  Albert  Fink,  had  long  attracted  the  attention 
of  the  trunk  line  managers.  Its  system  of  dividing  the 
traffic,  of  reporting  to  a  central  office  and  of  hearing  and 
deciding  complaints  had  enabled  it  to  exert  an  almost 
absolute  control  over  its  members,  to  compel  them  to 
make  honest  returns  and  to  prevent  rupture  and  rebellion. 
It  was  believed  that  a  pool  of  the  trunk  lines  could  not 
be  effective  or  permanent  unless  organized  upon  the 
Southern  basis  and  presided  over  by  a  trunk  expert. 
Accordingly,  when  in  1877  an  agreement  for  the  pooling 
of  the  west-bound  traffic  was  reached  by  the  trunk  lines, 
Mr.  Fink  was  tendered  the  position  of  pool  commissioner. 
Under  the  agreement  reached  the  total  tonnage  of  the 
west-bound  business  was  diAaded  in  such  a  way  that  the 
Erie  and  New  York  Central  roads  each  received  33  per 
cent.,  the  Pennsj'lvania  25  per  cent.,  and  the  Baltimore 
and  Ohio  9  per  cent,  of  it.  If  any  road  received  more 
freight  than  was  allotted  to  it  by  the  pool,  it  deliA'ered 
such  surplus  to  the  pool,  or  rather  to  such  a  road  as  the 
pool  commissioner  designated  as  not  having  received  its 
allotment.  The  success  of  this  pool  from  a  railroad  point 
of  view  made  the  trunk  lines  anxious  to  organize  a  similar 
pool  for  the  whole  east-bound  traffic.  It  was  proposed  to 
control  b}'  such  a  combination  the  rates  on  all  the  east- 
bound  traffic  of  the  Northwest,  b}^  making  Chicago  the 
pooling  center,  fixing  for  it  a  schedule  of  rates  and  mak- 
ing the  rates  of  all  the  railroad  centers  in  the  West  and 
Northwest  dependent  upon  it.  The  combination  was  to 
comprise  more  than  forty  companies,  controlling  over 
25,000  miles  of  road.     The  scheme  was  tried  for  three 


Combinations.  201 


months  in  1878,  but  proved  a  failure,  owing  to  the  fact 
that  nearly  all  of  the  many  diverging  interests  sought  their 
own  advantage.  The  Eastern  and  Western  trunk  line 
pools  were,  through  the  efforts  of  their  commissioner, 
successfully  maintained,  though  even  their  harmony  was 
occasionally  marred  by  a  short  war  precipitated  bj'  such 
members  as  would  think  themselves  entitled  to  larger 
shares  of  the  spoils.  But  a  readjustment  would  invar- 
iablj'  follow,  and  the  expenditures  of  the  war  would  be 
taxed  up  to  the  public. 

After  the  failure  of  the  gigantic  Western  pool  which  had 
been  organized  under  the  protectorate  of  the  trunk  lines, 
the  companies  which  had  composed  it  formed  such  local 
combinations  as  their  individual  interests  dictated.  It  is 
doubtful  whether  during  the  five  years  immediately  pre- 
ceding the  passage  of  the  Interstate  Commerce  Law  there 
was  any  junction  of  two  or  more  roads  in  the  United 
States  which,  except  during  the  period  of  an  occasional 
railroad  war,  had  any  competition  in  the  transportation 
business.  As  has  been  shown  before,  discriminations 
without  number  were  practiced  between  places  and  per- 
sons ;  goods  were  not  unf requently  carried  at  a  loss ;  but 
the  general  public  was,  as  a  rule,  compelled  to  pay  what 
the  traffic  would  bear,  or  rather  what  the  pooling  roads 
thought  it  could  bear. 

It  is  claimed  by  railroad  managers  that  pools  are  the 
only  effective  contrivances  for  checking  ruinous  competi- 
tion among  railroad  carriers,  and  that  they  are  therefore 
justifiable  as  a  means  of  self- protection.  This  might  per- 
haps be  a  valid  argument  if  any  attack  were  made  upon 
the  railroads  which  encroached  upon  their  rights  or  en- 
dangered their  existence,  but  if  railroad  companies  are 
disposed  to  cut  each  other's  throats,  the  public  should  not 


202  The  Railroad  Question. 


be  made  to  pay  the  penalty  of  their  depravity.  As  long 
as  schedule  rates  are  unreasonably  high,  railroads  will  be 
tempted  to  offer  to  certain  shippers  low  secret  rates;  but 
as  soon  as  all  rates  have  been  leveled  down  to  a  point 
where  they  will  yield  only  a  fair  profit  with  good  manage- 
ment, the  inducement  to  cut  below  them  is  largely  taken 
away.  Pools,  far  from  being  a  remedy  for  the  evils  of 
excessive  competition,  will  in  the  end  only  aggravate  the 
disease  which  they  attempt  to  cure.  The  high  rates  which 
they  maintain  attract  the  attention  of  speculative  men  and 
lead  to  the  construction  of  rival  roads.  While  the  traffic 
remains  the  same,  the  proceeds  must  then  be  divided 
among  a  larger  number  of  carriers.  Thus  the  construc- 
tion of  unneces.sary  roads,  which  has  often  ijeen  the  sub- 
ject of  bitter  complaint  on  the  part  of  the  older  roads,  is 
chargeable  directly  to  their  wrong  policies. 

One  of  the  principal  objections  to  industrial  and  com- 
mercial combinations  is  that  thej'  paralyze  trade.  Compe- 
tition stimulates  every  competitor  to  offer  the  best  at  the 
lowest  possible  price.  This  increases  the  demand  for  the 
commodity,  and  both  the  producer  and  the  consumer  are 
in  the  end  benefited  by  the  operation  of  this  law.  On  the 
other  hand,  combinations,  or,  what  is  the  same,  monopo- 
lies, increase  the  price,  remove  the  stimulus  to  excellence, 
and  reduce  the  demand,  and  thereby  affect  injuriously  the 
producer  and  consumer  alike.  Competition  in  the  railway 
service  would  mean  an  improved  service  and  lower  rates  and 
would  speedily  be  followed  by  a  large  increase  of  business. 

Another  serious  objection  to  pooling  is  that  it  invariably 
leads  to  periodic  wars,  which  unsettle  all  Ijusiness,  and 
but  too  often  introduce  into  legitimate  trade  the  element 
of  chance.  These  wars  give,  moreover,  to  designing  rail- 
road managers   an   opportunity  to  enrich  themselves  by 


Combinations.  203 


stock  speculations  at  the  expense  of   the  stockholders, 
whose  interests  they  use  as  a  football  for  the  accomplish- 
ment of  their  selfish  ends.     When  rates  are  reduced  to  a 
right  level,   and  arc  properly  adjusted,  and   are  equal  to 
all,  even  railroad  men  will   find  no  necessity  for  pools. 
The  desire  for  such  a  combination  is  a  desire  to  impose 
upon  somebody,  or  some   locality,  or  the  public  at  large. 
The  proposition  to  give  legal  sanction  to  pools,  made  by 
railroad  managers,  is  preposterous;  and  even  a  pool  to  be 
approved  by  the  Interstate  Commerce  Commission   is  out 
of  the  quiestion,  as  it  would  cause  the  railroads  to  increase 
their  eft'orts  to  control  the  appointment  of  the  commission. 
However  honest  it  may  look  on  its  face,  however  plausible 
may  be  the  arguments  produced  in  its  favor,  it  should  not 
be  permitted. 

There  is  no  doubt  but  under  the  proposed  pooling  ar- 
rangement railroad  interests,  watered  stocks  and  all,  would 
be  cared  for,  but  there  is  every  reason  to  believe  that  public 
interests  would  not  be  properly  protected. 

So  long  as  servility  by  a  member  of  tiie  Interstate 
Commerce  Commission  to  railroad  influences  serves  as  a 
stepping-stone  to  a  high  position  in  the  employ  of  railroad 
combinations,  with  a  salary  of  three  or  four  times  that  of 
an  Interstate  Commerce  Commissioner,  so  long  will  it  be 
unsafe  to  permit  such  powers  to  be  vested  in  that  com- 
mission. 

Pooling  by  railroads  should  not  be  permitted,  if  per- 
mitted at  all,  so  long  as  representatives  of  speculative 
interests  have  a  voice  in  their  management,  and  not  until 
all  fictitious  valuations  are  altogether  banished  from  the 
equation,  and  until  the  roads  are  brought  under  complete 
Government  control.  There  is  no  more  necessity  for  pools 
among  railroads  than  there  is  among  merchants  and  man- 


204  The  Railroad  Quest  ion. 

ufacturers.  The  capital  actually  invested  in  railroads  is 
now  receiving  larger  returns  than  investments  in  other  lines 
of  business,  and  their  incomes  are  increasing  from  year  to 
year. 

Every  pooling  combination  of  railroad  companies  for  the 
maintenance  of  rates  is  a  violation  of  common  law.  From 
time  immemorial  the  law  has  stamped  as  a  conspiracy  any 
agreement  between  individuals  to  support  each  other  in  an 
undertaking  to  injure  public  trade.  The  Interstate  Com- 
merce Act  reasserts  this  principle,  and  provides  penalties 
for  the  maintenance  of  such  combinations  among '  railroad 
companies.  If,  in  spite  of  this  act,  the  evil  still  exists,  it 
is  no  argument  against  the  merits  of  the  law,  but  it  does 
prove  that  the  machinery  provided  for  its  enforcement  is 
insufficient.  That  railroad  companies  can  be  made  to 
respect  the  law  there  can  be  no  doubt;  but  much  cannot 
be  accomplished  unless  the  people  fully  realize  the  magni- 
tude of  the  undertaking  and  vest  the  Grovernment  with 
sufficient  power  to  cope  with  an  organized  force  whose 
total  annual  revenue  is  nearly  three  times  as  large  as  that 
of  the  United  States.  The  discussion  of  the  question  how 
this  may  be  done  will  be  reserved  for  a  subsequent 
chapter. 


CHAPTER  VTIl. 

RAILROADS    IN    POLITICS. 

THE  question  might  be  asked  how  the  railroad  com- 
panies for  many  years  in  succession  have  been  able 
to  prevent  State  control  and  pursue  a  policy  so  detrimental 
to  the  best  interests  of  the  public.  One  might  think  that 
in  a  republic  where  the  people  are  the  source  of  all  power, 
and  where  all  officers  are  directly  or  indirectly  selected  by 
the  people  to  carry  out  their  wishes  and  to  administer  the 
government  in  their  interest,  a  coterie  of  men  bent  on 
pecuniary  gain  would  not  be  permitted  to  subvert  those 
principles  of  the  common  law  and  public  economy  which 
from  time  immemoi'ial  have  ,been  the  recognized  anchors 
of  the  liberty  of  the  Anglo-Saxon  race. 

The  statement  that  under  a  free  government  it  is  pos- 
sible for  a  few  to  suppress  the  many  might  almost  sound 
absurd  to  a  monarchist,  and  yet  is  it  true  that  for  the  past 
twenty-five  years  the  public  affairs  of  this  country  have 
been  unduly  controlled  by  a  few  hundred  railroad  man- 
agers. 

To  perpetuate  without  molestation  their  unjust  practices 
and  prevent  any  approach  to  an  assertion  of  the  principle 
of  State  control  of  railroad  transportation,  railroad  man- 
agers have  secured,  wherever  possible,  the  co-operation  of 
public  officials,  and,  in  fact,  of  every  semi-public  and  pri- 
vate agency  capable  of  affecting  public  opinion.  Their 
great  wealth  and  power  has  made  it  possible  for  them  to 
influence  to  a  greater  or  less  extent  every  department  of 
the   National   and  State   governments.      Their  influence 

206 


206  The  Railroad  Question. 

extends  from  the  township  assessor's  office  to  the  national 
capital,  from  the  publisher  of  the  small  cross-roads  paper 
to  the  editorial  staff  of  the  metropolitan  daily.  It  is  felt 
in  every  caucus,  in  every  nominating  convention  and  at 
every  election.  Typical  railroad  men  draw  no  party  lines, 
advocate  no  principles,  and  take  little  interest  in  any  but 
their  own  cause;  they  are,  as  Mr.  Gould  expressed  it, 
Democrats  in  Democratic  and  Republicans  in  Republican 
districts.  The  large  means  at  the  command  of  railroad 
companies,  their  favors,  their  vast  armies  of  employes 
and  attorneys  and  their  almost  equally  large  force  of 
special  retainers  are  freely  employed  to  carry  into  execu- 
tion their  political  designs,  and  the  standard  of  ethics 
recognized  by  railroad  managers  in  these  exploits  is  an 
exceedingly  low  one. 

It  is  a  settled  principle  of  these  men  that,  if  they  can 
prevent  it,  no  person  not  known  to  be  friendly  to  their 
cause  must  be  placed  into  any  public  office  where  he  might 
have  an  opportunity  to  aid  or  injure  their  interests.  The 
records  of  the  various  candidates  of  the  principal  parties 
for  city,  county.  State  and  national  offices  are  therefore 
carefully  canvassed  previous  to  the  primaries,  the  most 
acceptable  among  the  candidates  of  each  party  are  selected 
as  the  railroad  candidates,  and  the  local  representatives  of 
the  railroad  interest  in  each  part}'  are  instructed  to  use  all 
means  in  their  power  to  secure  their  nomination. 

If  none  but  candidates  who  are  servile  to  the  railroad 
interest  are  nominated  by  the  principal  parties,  the  elec- 
tion is  permitted  to  take  its  own  course,  for,  whichever  side 
is  successful,  the  railroad  interest  is  safe.  If,  however, 
there  is  reason  to  believe  that  a  nominee  is  not  as  devoted 
to  their  interests  as  the  nominee  of  an  opposing  party,  the 
latter  is  sure  to  receive  at  the  polls  wiiatever  suj^port  rail- 


Railroads  in  Politics.  207 


road  influence  can  give  him.  That  a  public  official  elected 
by  the  grace  of  a  railroad  manager  is  but  too  apt  to  become 
a  tool  in  his  hands  needs  no  proof.  Both  gratitude  and 
fear  tie  the  average  politician  to  the  powerful  forces  which 
can  control  his  political  destiny. 

The  railroad  manager,  on  the  other  hand,  always  kindlj'^ 
remembers  his  offlceholding  friends  as  long  as  they  are 
loyal  and  in  a  position  to  serve  him.  Before  the  enact- 
ment of  the  Interstate  Commerce  Act  there  was  every 
3'ear  a  wholesale  distribution  of  railroad  passes  among 
public  officeholders  and  other  prominent  politicians.  The 
pass  was  the  token  of  the  continued  good  will  of  the  rail- 
road dignitaries  as  the  withholding  of  the  "courtesy" 
was  a  certain  indication  of  their  displeasure.  If  the 
officeholder  had  personal  or  political  friends  whom  he 
desired  to  have  recognized,  an  intimation  of  this  desire 
was  generally  sufficient  to  have  the  pass  privilege  even 
extended  to  them.  And  yet  these  favors  were  not  be- 
stowed indiscriminately.  Thus  the  pass  credit  of  a  county 
official  was  more  limited  than  that  of  an  officer  of  the 
State,  and  the  latter  class  were  again  rated  according  to 
their  influence  and  rank.  Furthermore,  while  annual 
passes  were  thus  freelj^  distributed  among  one  class  of 
officials,  others  could  obtain  them  only  by  making  special 
application  for  them.  Members  of  the  legislature  would 
not  unfrequently  receive  their  supply  of  railroad  passes 
before  their  certificates  of  election  were  issued,  but  legis- 
lative committee  clerks  and  employes  in  the  various  de- 
partments of  the  State  government  were  required  to 
satisfy  the  railroad  authorities  that  they  were  in  a  posi- 
tion to  aid  or  to  injure  the  railroad  cause  before  their 
names  were  placed  on  the  list  of  persons  '  *  entitled  to  the 
courtesy. 


208  TJie  Railroad  Question. 

Of  course  the  judiciary,  as  a  coordinate  brauch  of  the 
government,  could  not  well  be  slighted.  Indeed,  previous 
to  the  enactment  of  the  Interstate  Commerce  Law,  a  judge 
would  have  regarded  it  an  affront  if  he  had  not  been  fur- 
nished with  passes  by  the  various  companies  operating 
railroads  in  his  district.  It  appears  that  the  law  has  not 
entirely  corrected  this  abuse,  for  only  about  two  years 
ago  the  Chicago  News  made  the  discovery  that  nearly 
every  judge  in  the  city  of  Chicago  traveled  on  passes.  It 
is  strange  to  what  extent  the  pass  often  debased  the 
judiciary.  It  was  not  unfrequent  for  judges  to  solicit 
passes  for  family  and  friends,  and  instances  might  be 
named  where  they  demanded  them  in  a  wholesale  way. 

The  impudent  demands  were  usually  honored  by  the 
railroad  authorities,  who  reasoned  that  they  could  better 
afford  to  bear  the  shameless  effrontery  of  the  ermined 
extortioner  than  the  damage  which  might  result  to  them 
from  adverse  decisions. 

A  railroad  pass,  when  presented  by  a  public  official  or 
even  by  anj^  public  man,  is  now,  in  nine  cases  out  of  ten,  a 
certificate  of  dishonor  and  a  token  of  servility,  and  is  so 
recognized  by  railroad  officials.  What  equivalent  railroad 
companies  expect  for  the  pass  "courtesy"  is  well  illus- 
trated by  the  experience  of  an  Iowa  judge.  This  gentle- 
man, who  had  been  on  the  bench  for  years  and  always 
had  been  favored  with  passes  by  the  various  companies 
operating  lines  in  his  district,  at  the  beginning  of  a  new 
year  failed  to  receive  the  customary  pass  from  a  leading 
road.  Meeting  its  chief  attorney,  he  took  occasion  to  call 
his  attention  to  what  he  supposed  to  have  been  an  over- 
sight on  the  part  of  the  officer  charged  with  the  distribution 
of  the  passes.  The  attorney  seemed  to  take  in  the  situ- 
ation at  once.      "Judge,"  said  he,  "  did  you  not  recently 


niti/riiii(Is  ill   Pdlific.s.  209 

decide  au  imporUmt  case  a<j;ainst  our  company  ?  "  'And 
was  my  decision,  *'  replied  the  Judge,  "  not  in  accordance 
with  law  as  well  as  with  justice  ?  "  The  attorney  did  not 
answer  this  question,  but  in  the  course  of  a  few  days  the 
Judge  received  the  desired  pass.  A  few  months  later  it 
again  became  the  Judge's  inipleasant  duty  to  render  a  de- 
cision adverse  to  the  same  compan3^  Tliis  second  act  of 
judicial  independence  was  not  forgiven,  and  the  next  time 
he  presented  his  pass  it  was  unceremoniously  taken  up  by 
the  conductor  in  the  presence  of  a  large  number  of  passen- 
gers, and  he  was  required  to  pay  his  fare. 

Employes,  while  engaged  in  the  legitimate  business  of 
their  companies,  should,  of  course,  be  transported  free,  but  a 
great  man}^  persons  receive  passes  and  are  classed  as 
emploj'es  who  never  render  any  legitimate  service  for  the 
company  giving  the  pass,  and  by  far  the  greater  portion 
of  passes  are  not  granted  from  pure  motives,  but  are 
given  for  the  purpose  of  corrupting  their  holders.  It 
arouses  antagonism,  because  as  a  rule  passes  are  given  to 
people  who  are  fully  able  to  pay  their  fare  and  are  denied 
to  those  who  are  least  able  to  pay  it.  The  passenger  who 
pays  his  fare  and  then  finds  that  a  large  number  of  his 
fellow-passengers  travel  on  passes  realizes  that  he  is  com- 
pelled to  pay  a  higher  fare  that  others  may  be  carried 
free.  He  feels  that  he  is  unjustly  discriminated  against, 
and  wonders  why  such  discrimination  is  tolerated  in  a 
country  whose  institutions  are  founded  upon  the  very 
principle  of  equal  rights  to  all.  A  good  anecdote  is 
related  which  well  illustrates  this  feeling.  A  farmer  and 
a  law^'er  occupied  the  same  seat  in  a  railroad  car.  When 
the  conductor  came  the  farmer  presented  his  ticket,  and 
the  lawyer  a  pass.  The  farmer's  features  did  not  conceal 
his  disgust  when  he  discovered  that  his  seat-mate  was  a 


210  The  Railroad  Question. 


deadhead.  The  lawyer,  trying  to  assuage  the  indignation 
of  the  observing  granger,  said  to  him :  ' '  My  friend,  j'ou 
travel  very  cheaply  on  this  road."  "  I  think  so  myself,'' 
replied  the  farmer,  ' '  considering  the  fact  that  I  have  to 
pay  fare  for  both  of  us. '' 

But  what  must  be  a  passenger"  s  surprise  when  he  finds 
that  the  judge  who  to-morrow  is  to  preside  at  the  trial  of 
a  case  in  which  the  railroad  company  is  a  party  to-day 
accepts  free  transportation  at  its  hands.  A  judge  maj' 
scorn  the  charge  that  he  is  influenced  by  a  railroad  pass, 
but  his  fellow -passenger  who  has  paid  his  fare  cannot 
understand  why  the  railroad  company  should  give  passes 
to  one  class  of  people  and  refuse  them  to  othei's,  if  it  does 
not  consider  one  more  than  others  to  be  in  a  position  to 
reciprocate  its  favors. 

In  their  endeavor  to  win  over  the  courts,  however,  the 
railroads  do  by  no  means  confine  their  attention  to  the 
judges.  The}'  are  well  aware  that  a  biased  jury  is  often 
more  useful  to  them  than  a  biased  judge,  and  efforts  are 
made  by  them  to  contaminate  juries,  or  at  least  prejudice 
them  in  their  favor.  A  prominent  Iowa  attorney,  the 
legal  and  political  factotum  of  a  large  railroad  corporation, 
for  years  made  it  a  practice  to  supply  jurors  with  passes. 
In  one  instance,  when  it  was  shown  in  court  by  the  oppos- 
ing counsel  that  all  jurors  in  the  case  on  trial  had  accepted 
passes  from  the  railroad  company  which  was  the  defend- 
ant in  the  case,  the  judge  found  himself  compelled  to 
discharge  the  whole  jury.  The  argument  made  by  this 
counsel,  in  support  of  his  motion  that  the  jury  be  dis- 
charged, was  certainly  to  the  point.  He  showed  that  in 
order  to  have  an  equal  chance  for  justice  it  would  be 
necessary  for  his  client  to  give  each  juror  at  least  fifty 
dollars  to  offset  the  bribes  given  to  them  by  the  railroad 
Compan3\ 


Railroads  in   Politics.  211 


That  it  has  always  been  the  policy  of  railroad  managers 
to  propitiate  the  jiuliciary  is  a  fact  too  generally  known 
among  pnl)lic  men  to  admit  of  contradiction.  If  a  judge 
owes  his  nomination  or  election  to  railroad  influences, 
railroad  managers  feel  that  they  have  in  this  a  guarantee 
of  loyalty.  If,  however,  he  acquires  the  ermine  in  spite 
of  railroad  opposition,  every  effort  is  made  to  conciliate 
the  new  dispenser  of  the  laws.  The  bestowal  of  unusual 
favors,  flattery,  simulated  friendship  and  a  thousand 
other  strategies  are  brought  into  requisition  to  capture  the 
wa^'ward  jurist.  If  he  proves  docile,  if  his  decisions  im- 
prove with  time  and  show  a  gradual  appreciation  of  the 
particular  sacredness  of  corporate  rights,  the  railroad 
manager  will  even  forgive  him  his  former  heresy  and  rally 
to  his  support  in  the  future.  But  if  he  asserts  his  con- 
victions, if  he  attempts  to  discharge  the  duties  of  his 
responsible  office  without  fear  or  favor,  if  he  can  neither 
be  corrupted  nor  intimidated,  all  available  railroad  forces 
will  be  marshaled  against  him  in  the  future. 

It  cannot  be  surprising  that,  under  such  circumstances, 
there  always  has  been  a  tendency  among  judges  to  be  con- 
servative and  to  give  the  railroads  the  benefit  of  the  doubt 
in  their  decisions.  Judges  well  know  that  railroad  com- 
panies appeal  almost  invariably  when  the  decision  of  a 
lower  court  is  adverse  to  them,  but  private  citizens  only 
in  exceptional  cases.  They  also  know  that  railroads  never 
forgive  adverse  decisions,  whether  right  or  wrong,  while 
private  citizens,  as  a  rule,  accept  the  decision  of  the  court 
as  justice,  and  do  not  hold  the  judge  responsible  for  its 
being  adverse  to  them.  Our  judiciary  is,  and  probably 
alwaj^s  has  been,  as  incorruptible  as  the  judiciary  of  any 
country  in  the  world ;  but  our  judges  are  made  of  no  better 
material  than  our  legislative  or  executive  officers.      Weak 


1312  The  Railroad  Question. 


men,  in  all  stations,  are  influenced  by  wealth  and'  power, 
and  weak  judges  can  always  be  found  who  will  be  led  or 
forced  from  the  path  of  duty  so  long  as  corrupt  men  are 
permitted  to  manage  raih'oads  and  to  remain  in  possession 
of  a  power  only  inferior  to  that  of  an  autocratic  ruler. 

The  influence  which  railroads  exert  extends  from  the 
lowest  to  the  highest  court  of  the  land.  Federal  courts 
have  more  than  once  been  successfully  appealed  to  to 
give  legal  sanction  to  the  perpetuation  of  gigantic  frauds, 
or  to  frustrate  attempts  made  by  the  individual  States  to 
place  restrictions  upon  roads  operated  within  their  respec- 
tive borders.  Twenty  years  ago  a  Federal  judge  aided  Mr. 
Gould  in  his  notorious  Erie  transactions,  and  in  more 
recent  years  a  Federal  circuit  judge  in  the  West  threw  the 
property  of  the  Wabash  Railroad  Company,  upon  the 
application  of  its  own  directors,  into  the  hands  of  receivers 
selected  by  its  former  managers  without  the  knowledge  or 
notice  of  its  creditors,  and  issued  orders  for  the  manage- 
ment of  the  property  which  greatl}^  discriminated  in  favor 
of  certain  bondholders  and  were  so  manifestly  unjust  that 
Judge  Grresham,  before  whom  the  case  was  subsequently 
brought,  did  not  hesitate  to  say  to  them  that  ' '  the  bold- 
ness of  this  scheme  to  aid  the  purchasing  committee,  by 
denying  equal  right  to  all  bondholders  secured  by  the  same 
mortgages,  is  equaled  only  by  its  injustice."  At  the  same 
time  one  of  the  counsel  for  the  dissenting  •  bondholders 
characterized  these  strange  orders  as  "the  highwayman's 
clutch  on  our  throat,  the  robber's  demand,  '  Your  money 
or  your  life. '  " 

The  decision  which  the  Supreme  Court  of  the  United 
States  rendered  in  the  Granger  cases  in  1876,  aflSrming 
the  right  of  a  State  to  control  railroad  charges  for  the 
transportation  of  passengers  and  freight  wlioll}^  within  the 


Radroads  in  Politics.  213 


State,  was  a  serious  disappointment  to  railroad  men,  for  it 
was  the  first  step  toward  wresting  from  them  the  power 
to  arbitrarily  control  the  ctMnmcrce  of  the  country.  Ever 
since  that  time  it  has  hcan  their  determined  purpose  to 
bring  about,  if  possible,  a  reconstruction  of  the  Federal 
Supreme  Court,  in  order  to  secure  a  reversal  or  modifica- 
tion of  the  Granger  decision.  In  the  case  of  Peik  vs. 
Chicago,  94th  U.  S, ,  170,  the  Supreme  Court  laid  down 
the  following  broad  principle  of  law:  "  Where  property 
has  been  clothed  with  the  public  interest,  the  legislature 
may  fix  a  limit  to  that  which  shall  in  law  be  reasonable 
for  its  use.  This  limit  binds  the  courts  as  well  as  the 
people.  If  it  has  been  improperly  fixed,  the  legislature, 
not  the  .  courts,  must  be  appealed  to  for  a  change. "  In 
one  of  the  Glranger  cases  the  same  court  used  the  follow- 
ing language :  ' '  We  know  that  this  is  a  power  which  may 
be  abused,  but  that  is  no  argument  against  its  existence. 
For  protection  against  abuses  by  legislatures,  the  people 
must  resort  to  the  polls." 

Fourteen  years  later,  in  the  case  of  C.  M.  &  St.  P.  R. 
Co.  vs.  Minn.,  decided  in  October,  1890,  the  same  court 
rendered  a  decision  so  indefinite  that  the  lawyers  differed 
much  in  their  opinions  as  to  its  meaning,  and  it  appears 
that  the  members  of  the  court  who  made  the  decision 
also  differed  in  their  opinions  as  to  the  meaning  of  the 
decision ;  for  Justice  Bradley  said  in  his  dissenting  opin- 
ion, in  which  Justice  Gray  and  Justice  Lamar  concurred, 
that  the  decision  practically  overruled  Munn  vs.  Illinois; 
but  the  same  court,  in  a  case  entitled  Budd  vs.  New  York, 
submitted  in  October,  1891,  and  decision  rendered  Feb- 
ruary 29,  1892,  and  opinion  delivered  by  Justice  Blatch- 
ford,  in  referring  to  the  Minnesota  case,  after  quoting  the 
above  statement  from  Justice   Bradlev,  said;    "  But  the 


214        '  The  Railroad   Question. 


opinion  of  the  court  did  not  say  so,  nor  did  it  refer  to 
Munn  vs.  Illinois,  and  we  are  of  opinion  that  the  decision 
in  that  case  is,  as  will  be  hereafter  shown,  quite  distin- 
guishable from  the  present  case." 

It  is  thus  apparent  that  this  court  has  adhered  to  the 
decision  in  Munn  vs.  Illinois,  and  to  the  doctrines 
announced  in  the  opinion  of  the  court  in  that  case,  and 
those  doctrines  have  since  been  repeatedly  enforced  in  the 
decisions  of  the  courts  of  the  States. 

Judge  Brewer,  whose  zeal  for  the  defense  of  corporate 
interests  seems  to  amount  almost  to  a  craze,  dissented. 
He  said:  "I  dissent  from  the  opinion  and  judgment  in 
these  cases.  The  main  proposition  upon  which  they  rest 
is,  in  my  judgment,  radically  unsound.  It  is  the-doctrine 
of  Munn  vs.  Illinois  reaffirmed.  The  paternal  theory  of 
government  is  to  me  odious.  Justice  Field  and  Justice 
Brown  concur  with  me  in  this  dissent." 

It  should  be  remembered  that  Justices  Brewer  and 
Brown  were  both  appointed  to  the  Supreme  bench  by 
President  Harrison. 

We  have  eveiy  reason  to  believe  that,  unless  the  people 
of  the  United  States  are  on  the  alert,  as  railroad  managers 
always  are,  there  is,  with  further  changes  in  the  personnel 
of  the  court,  danger  of  its  deviating  from  the  sound  prin- 
ciples of  law  laid  down  in  its  decision  in  the  Granger 
cases.  Railroad  attorneys  have  repeatedly  been  raised  to 
seats  in  the  highest  tribunal  in  the  land.  So  great  is  the 
power  of  the  railroad  interests,  and  so  persistent  are  they 
in  their  demands,  that,  unless  a  strong  public  sentiment 
records  its  protest,  their  candidates  for  appointive  offices 
are  but  too  apt  to  be  successful.  Representatives  of  the 
railroads  sit  in  the  Congress  of  the  United  States,  others 
are  members  of  the  national  campaign  committees  of  both 


Railroads  in  Politics.  215 

of  the  great  political  parties,  others  control  the  politics  of 
the  States,  and  their  influence  reaches  to  the  White  House, 
whether  its  occupant  is  aware  of  it  or  not.  Other  inter- 
ests in  the  past  have  succeeded  in  securing  the  appoint- 
ment of  biased  men  as  judges  of  the  Supreme  Court  who 
afterwards  could  always  be  relied  upon  to  render  decisions 
in  their  favor.  Will  the  people  profit  by  their  experience, 
or  will  they  be  iudifTerent  to  the  danger  which  surrounds 
them,  until  nothing  short  of  a  political  upheaval  can 
restore  to  them  these  rights  of  sovereignty,  of  which  they 
have  so  insidiously  been  deprived? 

Human  gratitude  is  such  that  even  high-minded  men 
who,  through  the  influence  of  the  railroad  interest,  have 
been  placed  upon  the  Federal  bench,  find  it  impossible  to 
divest  themselves  of  all  bias  :when  called  upon  to  decide  a 
case  in  which  their  benefactors  are  interested.  Such  is 
the  human  mind  that,  when  clouded  by  prejudice,  it  will 
forever  be  blind  to  its  own  fault.  Even  the  members  of 
so  high  a  tribunal  as  the  Electoral  Commission  which  de- 
cided the  presidential  contest  between  Hayes  and  Tilden . 
could  not  divest  themsetves  of  their  prejudices;  each  one, 
Republican  or  Democrat,  voted  for  the  candidate  of  the 
party  with  which  he  had  cast  his  political  fortune. 

Last  January,  in  an  address  delivered  before  the  New 
York  State  Bar  Association  at  Albany,  Mr.  Justice  Brewer 
reminded  his  hearers  that  the  rights  of  the  railroads 
' '  stand  as  secure  in  the  eye  and  in  the  custody  of  the  law 
as  the  purposes  of  justice  in  the  thought  of  God."  And 
further  on  they  were  told  that  "  there  are  to-day  $11,000,- 
000,000  invested  in  railroad  property,  whose  owners  in 
this  country  number  less  than  two  million  persons.  Can 
it  be  that  whether  that  immense  sum  shall  earn  a  dollar  or 
bring  the  slightest  recompense  to  those  who  have  invested 


216  The  Railroad    Question. 

perhaps  their  all  in  that  business,  and  are  thus  aiding  in 
the  development  of  the  country,  depends  wholly  upon  the 
whim  and  greed  of  that  great  majority  of  sixty  millions 
who  do  not  own  a  dollar?  It  may  be  said  that  that  ma- 
jority will  not  be  so  foolish,  selfish  and  cruel  as  to  strip 
that  property  of  its  earning  capacity.  I  say  that  so  long 
as  constitutional  guarantees  lift  on  American  soil  their 
buttresses  and  bulwarks  against  wrong,  and  so  long  as  the 
American  judiciary  breathes  the  free  air  of  courage,  it 
cannot." 

Unfortunately  -judicial  buttresses  and  bulwarks  have  not 
always  been  lifted  against  wrong.  Judge  Taney,  like 
Brewer,  supposed  that  it  was  left  at  his  time  for  his 
court  to  preserve  the  peace  and  provide  for  the  safety  of 
the  nation ;  but  history  has  shown  that  we  cannot  depend 
upon  that  high  tribunal  for  safety  when  it  is  controlled 
by  weak  or  inefficient  men. 

When  we  consider  what  "that  great  majority"  has 
done  for  this  country  in  the  past,  and  is  doing  for  it  at  the 
present  time,  and  especially  when  we  contrast  its  sense  of 
justice  and  right  with  the  weakness  and  inability  of  some 
of  its  public  servants,  does  it  not  seem  to  be  a  little  pre- 
sumptuous for  them  to  assume  that  ' '  the  danger  is  from 
the  multitudes — the  majority,  with  whom  is  the  power, " 
and  that,  were  it  not  for  their  superior  wisdom  and  patri- 
otic action,  this  great  government  of  the  people,  by  the 
people  and  for  the  people  would  be  a  failure? 

Mr.  Lincoln  never  feared  "the  whim  and  greed"  of 
"  that  great  majority, "  but  he  had  at  all  times  implicit 
confidence  in  the  great  mass  of  the  people,  and  they  in 
return  had  full  confidence  that  no  temptation  of  wealth  or 
power  was  sufficient  to  seduce  his  integrity. 

We  cannot  dismiss  this  subject  without  referring  to  a 


Railroads  in  Politics.  217 

stratagem  which  raih'oads  have  in  the  past  repeatedly 
resorted  to  for  the  purpose  of  removing  from  the  bench 
judges  of  independent  minds  whom  they  found  it  impossi- 
ble to  control.  This  stratagem  consists  of  a  well-disguised 
bribe,  by  which  a  Federal  judge  is  changed  into  a  railroad 
attorney  with  a  princely  salary.  The  railroad  thus  gets 
rid  of  an  undesirable  judge  and  gains  a  desirable  solicitor 
at  a  price  at  which  they  could  well  have  afforded  to 
pension  the  judge. 

The  following  is  a  copy  of  a  broker's  circular  letter  sent 
to  prominent  bankers  of  Iowa,  and  shows  that  even  the 
Clerk  of  the  United  States  Court  is  not  overlooked : 

" ,  June  30th,   1892. 

"Mr , 

"We  offer,  subject  to  sale  at  par  and  interest,  note 
$2,500.     Date,  July  5th,  1892.   Time,  six  months;  rate,  6 

per  cent.    Payable  where  desired.      IVlaker, 

Endorser,  Judge Mr , 

the  maker,  is  clerk  of  the  United  States  Circuit  Court  at 

Judge the  well  known 

attorney  of  the and Rail- 
way Co.,  of ,  stated  to  us  to  be  worth  $150,- 

000  to  $200,000.      Can  you  use  it  ?  " 

While  railroad  managers  rely  upon  ser\'ile  courts  as  a 
last  resort  to  defeat  the  will  of  the  sovereign  people,  they 
are  far  from  losing  sight  of  the  importance  of  controlling 
the  legislative  branch  of  the  government.  By  preventing 
what  they  are  pleased  to  call  unfriendly  legislation  they 
are  more  likely  to  prevent  friction  with  public  opinion, 
and  they  avoid  at  the  same  time  the  risk  of  permanently 
prejudicing  their  cause  by  an  adverse  opinion  upon  a  con- 
stitutional question  which  they  may  find  it  necessary  to 
raise  in  order  to  nullify  a  legislative  act.  There  are  three 
distinct  means  employed  by  them   to  control  legislative 


218  The   Railroad  Question. 

action.  First,  the  election  to  legislative  offices  of  men 
who  are,  for  some  personal  reason,  adherents  to  the  rail- 
road cause.  Second,  the  delusion,  or  even  corruption,  of 
weak  or  unscrupulous  members  of  legislative  bodies. 
Third,  the  employment  of  professional  and  incidental 
lobbyists  and  the  subsidizing  of  newspapers,  or  their  repre- 
sentatives, for  the  purpose  of  influencing  members  of 
legislative  bodies  and  their  constituencies. 

There  are  probably  in  every  legislative  body  a  number 
of  members  who  are  in  some  way  or  other  connected  with 
railroad  corporations.  No  doubt,  a  majority  of  these  are 
personally  irreproachable  and  even  so  high-minded  as  to 
always  postpone  private  for  public  interest;  j-et  there  are 
also  those  whose  political  advancement  was  brought  about 
by  railroad  managers  for  the  ver}-  purpose  of  having  in 
the  legislative  body  servile  members  who  could  always  be 
relied  upon  to  serve  their  corporate  masters.  Neverthe- 
less, were  railroad  interests  restricted  to  the  votes  of  these 
men  for  their  support,  the  public  would  probably  have  no 
cause  for  alarm  on  account  of  the  presence  of  railroad 
representatives  in  legislative  bodies,  iiut,  as  many  other 
interests  seek  favorable  legislation,  railroad  men  are  often 
enabled  to  gain  support  for  their  cause  b}^  a  corrupt  bar- 
gain for  votes,  and  it  is  thus  possible  for  them  to  double, 
triple,  and  even  quadruple,  their  original  strength,  by  a 
policy  of  reciprocity. 

As  in  Congress  and  State  legislatures,  so  these  repre- 
sentatives of  the  railroads  may  be  found  in  our  city  coun- 
cils. The  leaders  of  the  railroads  in  Congress  and  in  the 
legislatures  of  the  various  States  usually  rely  upon  dis- 
cretion for  obtaining  their  end,  but  railroad  aldermen  with 
but  few  exceptions  seek  to  demonstrate  their  loyalty  to 
the  cause  to  which  they  are  committed  by  a  zealous  advo- 


Railroads  in  Politics.  21!) 

cacy  of  extreme  measures,  and  will  not  unf requently  even 
gain  their  end  through  the  most  unscrupulous  combina- 
tions. If  their  votes,  together  with  such  support  as  they 
obtain  by  making  trades,  are  not  sufficient  to  carry  out  or 
defeat  a  measure  which  the  railroad  interests  may  favor 
or  oppose,  even  more  questionable  means  are  employed  to 
gain  a  sufficient  number  of  votes  to  command  a  majority. 

Outright  bribery  is  probably  the  means  least  often  em- 
ployed by  corporations  to  carry  their  measures.  While  it 
may  be  true  that  the  vote  of  every  weak  and  unscrupu- 
lous legislator  is  a  subject  of  barter,  money  is  not  often 
the  compensation  for  which  it  is  obtained.  It  is  the  policy 
of  the  political  corruption  committees  of  corporations  to 
ascertain  the  weakness  and  wants  of  every  man  whose 
services  they  are  likely  to  need,  and  to  attack  him,  if  his 
surrender  should  be  essential  to  their  victory,  at  his 
weakest  point.  Men  with  political  ambition  are  encour- 
aged to  Aspire  to  preferment  and  are  assured  of  corporate 
support  to  bring  it  about.  Briefless  lawyers  are  promised 
corporate  business  or  salaried  attorneyships.  Those  in 
financial  straits  are  accommodated  with  loans.  Vain  men 
are  flattered  and  given  newspaper  notoriety.  Others  are 
given  passes  for  their  families  and  their  friends.  Shippers 
are  given  advantages  in  rates  over  their  competitors;  in 
fact,  every  legislator  disposed  to  barter  his  vote  away 
receives  for  it  compensation  which  combines  the  maximum 
of  desirability  with  the  minimum  of  violence  to  his  self- 
respect. 

Those  who  attempt  to  influence  or  control  legislative 
bodies  in  behalf  of  interested  parties  are  collectively 
called  the  lobby.  As  a  rule,  the  lobby  consists  of  promi- 
nent politicians  likely  to  have  influence  witli  members  of 
their  own  party  ;   of  men  of  good  address  and  easy  con- 


220  The   Railroad   Question. 


science,  familiar  alike  with  the  subject  under  consideration 
and  legislative  procedure,  and  last,  but  not  least,  of  con- 
fidential agents  authorized  and  prepared  to  enter  into  secret 
negotiations  with  venal  members.  The  lobby  which  repre- 
sents the  railroad  companies  at  legislative  sessions  is 
usually  the  largest,  the  most  sagacious  and  the  most  un- 
scrupulous of  all.  Its  work  is  systematic  and  thorough, 
its  methods  are  unscrupulous  and  its  resources  great. 
Yet  all  the  members  of  a  legislative  body  cannot  be 
bribed,  either  by  money,  or  position,  or  favors.  Some  of 
them  will  not  vote  for  any  proposed  measure  unless  they 
can  be  con%inced  that  it  is  for  the  public  welfare.  These 
legislators,  if  their  votes  are  needed,  are  turned  over  to  the 
persuasive  eloquence  of  those  members  of  the  lobby  who, 
apparent!}^,  have  come  to  the  capital  moved  by  a  patriotic 
impulse  to  set  erring  legislators  right  on  public  questions. 
Their  familiarity  with  public  matters,  their  success  in 
public  life,  their  high  standing  in  political  circles,  their 
apparent  disinterestedness  and  their  plausible  arguments 
all  combine  to  give  them  great  influence  over  new  and  in- 
experienced members.  In  extreme  cases  influential  con- 
stituents of  doubtful  members  are  sent  for  at  the  last 
moment  to  labor  with  their  representatives,  and  to  assure 
them  that  the  sentiment  of  their  districts  is  in  favor  of  the 
measure  advocated  by  the  railroads.  Telegrams  pour  in 
upon  the  unsuspecting  members.  Petitions  in  favor  of 
the  proposed  measure  are  also  hastily  circulated  among 
the  more  unsophisticated  constituents  of  members  sensi- 
tive to  pulilic  opinion,  and  are  then  presented  to  them  as 
an  unmistakable  indication  of  the  popular  will,  although 
the  total  number  of  signers  forms  a  very  small  percentage 
of  the  total  number  of  voters  of  the  districts  in  which  these 
petitions  were  circulated.      A  common  method  employed 


Rail  mads  in  PoUtus.  221 


by  the  railroad  lobby  in  Iowa  has  been  to  arouse,  by  in- 
genious arguments,  the  prejudices  of  the  people  of  one 
part  of  the  State  agahist  tliose  of  another,  or  of  one  class 
against  those  of  another  class  ;  for  instance,  the  East 
against  the  AVest,  or  that  portion  of  the  State  the  least 
supplied  with  railroad  facilities  against  that  which  is  best 
supplied  ;  or  the  river  cities  against  the  interior  cities  ;  or 
the  countr}'  people  against  the  city  people  ;  or  the  farmer 
against  the  merchant,  and  always  artfully  keeping  in  view 
the  opportunity  to  utilize  one  side  or  the  other  in  their 
own  interest. 

Another  powerful  reinforcement  of  the  railroad  lobby  is 
not  unfrequently  a  subsidized  press  and  its  correspondents. 
The  party  organs  at  the  capital  are  especially  selected  to 
defend  as  sound  measures,  either  from  a  partisan  or  non- 
partisan standpoint,  legislation  of  questionable  propriety 
desired  by  the  railroads.  When  such  measures  are  advo- 
cated I13'  party  organs,  partisan  members,  either  from  fear 
or  prejudice,  are  apt  to  "  fall  into  line,"  and  then  to  rely 
upon  these  organs  to  defend  their  action.  Editors,  re- 
porters and  correspondents  are  even  retained  as  active 
lobbjists  and  give  the  railroad  managers'  cause  the  benefit 
of  their  prestige.  To  such  an  extent  has  the  abuse  of  the 
press  been  carried  that  a  considerable  numl)er  of  its  un- 
worthy representatives  look  upon  railroad  subsidies  as 
legitimate  perquisites  which  they  will  exact  through 
blackmailing  and  other  means  of  compulsion  if  they  are 
not  offered.  A  case  may  be  cited  here  to  illustrate  their 
mode  of  operation,  as  well  as  the  ethics  of  railroad  lob- 
bies. During  one  of  the  sessions  of  the  Iowa  legislature  a 
newspaper  correspondent  came  in  possession  of  some  in- 
formation which  reflected  severely  on  the  railroad  lobby. 
He  made  his  information  the  subject  of  a  spicy  article  and 


222  Tlie  Railroad   Question, 

showed  it  to  a  friend  who  stood  close  to  the  gentleman 
chiefly  implicated,  with  the  remark  that  nothing  but  a 
hundred  dollar  bill  would  prevent  the  transmission  of  the 
article  by  the  evening  mail  to  the  paper  which  he  repre- 
sented. Before  sundown  the  stipulated  price  for  the 
correspondent's  silence  was  paid,  and  an  enemy  was  turned 
into  a  friend. 

Professor  Bryce  saj's  of  the  American  lobby  system : 
' '  All  legislative  bodies  which  control  important  pecun- 
iary interests  are  as  sure  to  have  a  lo])by  as  an  axxny  to 
have  its  camp  followers.  Where  the  bod}'  is,  there  will 
the  vultures  be  gathered  together."  To  such  an  extent 
is  the  lobby  abuse  carried  that  some  large  corporations 
select  their  regular  solicitors  more  for  their  qualifications 
as  lobbyists  than  for  their  legal  lore.  It  is  a  common 
remark  among  lawyers  that  a  great  company  in  Chicago 
pays  a  third-class  lawyer,  who  has  the  reputation  of  being 
a  first-class  lobbyist,  an  extravagant  salary  and  calls  him 
general  solicitor,  while  it  relies  upon  other  lawyers  to 
attend  to  its  important  legal  business.  The  readiness  of 
members  of  the  bar  to  serve  wealthy  corporations  is  fast 
bringing  the  legal  profession  of  America  into  disrepute 
abroad.  The  author  just  quoted,  in  speaking  of  its  moral 
standard,  says:  -'But  I  am  bound  to  add  that  some 
judicious  American  observers  hold  that  the  last  thirty 
years  have  witnessed  a  certain  decadence  in  the  bar  of 
the  great  cities.  They  say  that  the  growth  of  enormously 
rich  and  powerful  corporations,  willing  to  pay  vast  sums 
for  questionable  services,  has  seduced  the  virtue  of  some 
counsel  whose  eminence  makes  their  example  important, 
and  that  in  a  few  States  the  degradation  of  the  bench  has 
led  to  secret  understandings  between  judges  and  counsel 
for  the  perversion  of  justice." 


Rail idiiiIk  ill  Politics.  223 


Tlicre  lire,  of  coursf,  able  and  honorable  attorneys 
employed  by  railroad  companies,  but  often  railroad  law- 
yers are  selected  more  for  their  political  influence,  tact 
and  ingenuity  than  for  legal  ability,  and,  as  a  rule,  tin- 
political  lawN'er  receives  much  better  compensation  foi- 
his  services  than  does  the  lawyer  who  attends  strictly  to 
legitimate  legal  work. 

The  danger  from  railroad  corporations  lies  in  their 
great  wealth,  controlled  by  so  few  persons,  and  the  want 
of  publicity  in  their  business.  Were  they  required  to 
render  accounts  of  their  expenditures  to  the  pul^lic,  legis- 
lative corruption  funds  would  soon  be  numbered  with  the 
defunct  abuses  of  railroad  corporations,  and,  with  bribes 
wanting  in  the  balance  of  legislative  equivalents,  the  rep- 
resentatives of  the  people  could  be  trusted  to  enact  laws 
just  alike  to  the  corporations  and  the  public,  while  assert- 
ing the  right  of  the  people^to  control  the  public  highway 
and  to  make  it  subservient  to  the  welfare  of  the  many 
instead  of  the  enrichment  of  the  few.  A  w'ise  law  regu- 
lating lobbies  exists  in  Massachusetts.  Every  lobbyist  is 
required  to  register,  as  soon  as  he  appears  at  the  Capitol, 
to  state  in  whose  interest  and  in  what  eapacit}'  he  attends 
the  legislative  session,  to  keep  a  faithful  account  of  his 
expenses  and  to  file  a  copy  of  the  same  with  the  Secretary 
of  State.  AVere  a  similar  law  enacted  and  enforced  by 
every  State  legislature,  as  well  as  by  Congress,  the  power 
of  railroad  lobbies  would  be  curtailed. 

Railroad  managers  never  do  things  In'  halves.  Well 
realizing  that  it  is  in  the  power  of  a  fearless  executive,  by 
his  veto,  to  render  futile  the  achievements  of  a  costly 
lobby  and  to  injure  or  benefit  their  interests  by  pursuing 
an  aggressive  or  conservative  policy  in  the  enforcement  of 
the  laws,  they  never  fail  to   make   their  influence  felt  in 


224  TIk'     h\tilnul,l     Ijlirsllu,,. 

the  selection  of  a  chief  magistrate,  either  of  the  Nation  or 
of  an  individual  State.  No  delegate,  with  their  permission, 
ever  attends  a  national  convention,  Eepublican  or  Demo- 
cratic, if  he  is  not  known  to  favor  the  selection  of  a  man  as 
the  presidential  candidate  of  his  party  whose  conservatism 
in  all  matters  pertaining  to  railroad  interests  is  well  es- 
tablished. At  these  conventions  the  railroad  companies 
are  alwaj'S  represented,  and  their  representatives  do  not 
hesitate  to  inform  the  delegates  that  this  or  that  candidate 
is  not  acceptaljle  to  their  corporations  and  cannot  receive 
their  support  at  the  polls.  Daring  the  Chicago  convention 
of  1888  the  statement  was  openly  made  that  two  of  the 
Western  candidates  lost  Eastern  support  because  they 
were  not  acceptable  to  a  prominent  New  York  delegate 
who  had  come  to  Chicago  in  a  threefold  capacity — that  of  a 
delegate,  a  presidential  possibility,  and  special  represent- 
ative of  one  of  the  most  powerful  railroad  interests  in  the 
country.  This  same  man  appeared  again  last  year  at  the 
Minneapolis  convention  as  chief  organizer  of  the  forces  of 
a  leading  candidate.  His  counterpart  was  in  attendance 
at  the  Chicago  convention  looking  after  the  same  interests 
there. 

It  is  the  boast  of  prominent  railroad  men  that  their  inflii- 
ence  elected  President  Garfield,  and  the  statement  has 
been  made  upon  good  authority  that  ' '  not  until  a  few 
days  before  the  election  did  the  Garfield  managers  feel 
secure,"  and  that  "  when  the  secret  history  of  that  cam- 
paign comes  to  be  written  it  will  l)e  seen  that  Jay  Gould 
had  more  influence  upon  tlie  election  than  Grant  and 
Conkling. "  It  cannot  be  said  that  railroad  managers,  as 
a  class,  have  often  openly  supported  a  presidential  candi- 
date. This  may  be  due  to  the  fact  that  with  the  uncer- 
tainty which  has  for  years  attended  national  politics  they 


R(t!lro((ds  ill  Politics. 


deem  it  the  part  of  discretion  to  pi-eteud  friendship  for 
either  part}^  and  then  shout  with  the  victor.  In  con- 
formity with  this  policy,  a  well-known  New  York  railroad 
millionaire  has  for  years  made  large  and  secret  contribu- 
tions to  the  campaign  funds  of  both  political  parties.  He 
thereby  places  both  parties  under  political  obligations, 
and  believes  his  interests  safe,  whichever  turn  the  political 
wheel  may  take.  After  the  contest  he  is  usually '  the 
first  to  congratulate  the  successful  candidate.  In  the 
national  campaign  of  1884  this  railroad  king  completely 
outwitted  a  prominent  Western  politician  and  member  of 
the  Republican  national  campaign  committee  who  has 
always  prided  himself  on  his  political  sagacity.  This 
gentleman  had  taken  it  upon  himself  to  enlist  the  rich  and 
powerful  New  Yorker  in  the  Republican  cause,  and  to 
obtain  from  him,  as  a  token  of  his  sincerity,  a  large  con- 
tribution to  the  Blaine  campaign  fund.  He  succeeded,  at 
least  so  far  as  the  contribution  was  concerned  ;  but  when 
the  struggle  was  over  and  the  opposition,  in  the  exuber- 
ance of  joy  over  their  victory,  told  tales  out  of  school,  he 
was  not  a  little  chagrined  to  find  that  the  managers  of  the 
Cleveland  campaign  had  received  from  the  astute  railroad 
millionaire  a  campaign  contribution  twice  as  large  as  that 
which  he  had  obtained  from  him.  The  diatribes  which 
for  weeks  after,  the  election  filled  the  columns  of  his  paper 
reflected  in  every  line  the  injured  pride  of  the  outwitted, 
general. 

Judging  from  the  laxity  with  which  the  railroad  laws 
have  been  enforced  in  a  considerable  number  of  States,  their 
executive  departments  are  as  much  under  the  influence  of 
railroad  managers  as  are  the  legislative  departments  of 
others.  This  cannot  be  surprising  to  those  who  know  how 
often  governors  of    States    are   nominated  and  elected 


226  The    ]l<ulin„<l     Qtlrstlon. 


through  raih-oad  influences,  and  what  efforts  are  made  by 
corporations  to  humor  servile  and  to  propitiate  independ- 
ent executives.  The  time  is  not  far  remote  when  nearl}'^ 
every  delegate  to  a  State  convention  had  free  transporta- 
tion for  the  round  trip.  This  transportation  was  furnished 
to  delegates  by  railroad  managers  through  their  local 
attorneys,  or  through  favored  candidates  and  their  confi- 
dants. It  was  only  offered  to  those  who  were  supposed 
to  be  friendly  to  candidates  approved  by  the  railroad 
managers  ;  and  as  free  passage  was  lool^ed  upon  as  the 
legitimate  perquisite  of  a  delegate,  but  few  persons  could 
be  induced  to  attend  a  State  convention  and  pay  their  fare. 
As  a  consequence,  the  railroad  managers  found  it  too  often 
an  easy  matter  to  dictate  the  nomination  of  candidates. 

Since  the  adoption  of  the  Interstate  Commerce  Law 
convention  passes,  as  such,  have  largely  disappeared  ;  but 
many  a  prominent  politician  in  going  to  and  returning 
from  political  conventions  travels  as  a  railroad  employe, 
though  the  only  service  which  he  renders  to  the  railroad 
companies  consists  in  manipulating  conventions  in  their 
favor.  If  all  the  railroad  candidates — and  the  companies 
usually  take  the  precaution  to  support  more  than  one 
candidate — are  defeated  in  the  convention  of  one  party, 
and  a  railroad  candidate  is  nominated  by  the  other  party, 
the  latter  is  certain  to  receive  at  the  polls  every  vote 
which  railroad  and  allied  corporate  influence  can  command. 

One  might  suppose  that  an  attempt  would  at  least  be 
made  to  hide  from  the  general  public  the  interference  of 
such  a  power  with  the  politics  of  a  State  ;  but  railroad 
managers  seem  to  rely  for  success  as  much  upon  intimidat- 
ing political  parties  as  upon  gaining  the  good  will  of  in- 
dividual citizens.  To  influence  party  action,  the  boast 
has   in  recent  years  repeatedly  and  boldly  been  made  in 


Rail fOdds  ill  J'olitics.  227 


Iowa  that  30,000  railroad  employes  would  vote  as  a  unit 
against  any  party  or  individual  daring  to  legislate  or 
otherwise  take  official  action  against  their  demands,  and 
forgetting  that,  with  the  same  means  used  in  opposition 
to  them,  a  few  hundred  thousand  farmers  and  business 
men  could  be  easily  organized  to  oppose  them.  Unscru- 
pulous employers  often  endeavor  to  control  the  votes  of 
their  employes.  This  is  particularly  true  of  railroad  com- 
panies, and  they  use  man}'  ingenious  plans  to  accomplish 
it.  In  the  Northwest,  and  especially  in  Iowa,  they  have 
for  several  years  organized  their  employes  as  a  political 
force  for  the  purpose  of  defeating  such  candidates  for 
State  offices  as  were  known  to  favor  State  control  of  the 
transportation  business.  They  have  even  paid  the  ex- 
penses of  the  organization,  although  they  have  made  every 
effort  to  make  it  appear  as  if  the  movement  was  a  volun- 
tary one  on  the  part  of  their  employes.  They  are  em- 
ploying this  method  in  Texas  and  other  States  at  the 
present  time,  in  opposition  to  the  effort  that  is  being  made 
by  the  people  to  secure  just  and  reasonable  treatment 
from  the  railroads. 

That  the  chief  executive  of  a  State  should  be  influenced 
in  the  discharge  of  his  official  duties  by  such  favors  as 
passes,  the  freedom  of  the  dining-  and  sleeping-car,  by  the 
free  use  of  a  special  car,  or  even  a  special  train,  one  is 
loath  to  believe  ;  yet  it  is  a  fact,  and  especially  during 
political  campaigns,  that  such  favors  are  frequently  offered 
to,  and  accepted  by,  the  highest  executive  officers,  and  it 
is  equally  true  that  many  of  these  officers  often  connive  at 
the  continued  and  defiant  violations  of  law  by  railroad  offi- 
cials. While  the  men  who  manage  large  railroad  interests 
do  not  always  possess  that  wisdom  which  popular  reverence 
attributes  to  them,  tliey  certainly  possess  great  cunning, 


228  The  Railroad  Qitestion. 

and  expend  much  of  their  artfulness  in  efforts  to  win  over 
scrupulous,  and  to  render  still  more  servile  unscrupulous 
executives.  The  general  railroad  diplomate  never  omits  to 
pay  homage  to  the  man  in  power,  to  flatter  him,  to  im- 
press him  with  the  political  influence  of  his  company,  to 
intimate  plainly  that,  as  it  has  been  in  the  past,  so  it  will 
be  in  the  future  its  determined  policy  to  reward  its  friends 
and  to  punish  its  enemies.  If  the  executive  proves  in- 
tractable, if  he  can  neither  be  flattered,  nor  coaxed,  nor 
bribed  into  submission,  he  does  not  hesitate  to  resort  to 
intimidation  to  accomplish  his  purpose.  This  is  by  no 
means  a  rare  occurrence.  There  are  few  public  men  who, 
if  determined  to  do  their  duty,  have  not  been  subjected  to 
railroad  insult  and  intimidation.  The  author  may  be  per- 
mitted to  give  an  instance  from  his  personal  experience. 
Soon  after  his  inauguration  as  Governor  of  Iowa  a  general 
officer  of  one  of  the  oldest  and  strongest  Western  railroads 
called  at  his  office  and  importuned  him  with  unreasonable 
requests.  When  he  found  that  he  had  utterly  failed  to 
impress  the  author  with  his  arguments,  he  left  abruptly, 
with  the  curt  remark  that  these  matters  could  be  settled 
on  election  day,  and  he  emphasized  his  statement  by 
slamming  the  door  behind  him. 

A  servile  railroad  press  has  alwaj's  been  ready  to  mis- 
represent and  malign  executive  officers  who  have  refused 
to  acknowledge  any  higher  authority  than  the  law,  the 
expressed  public  will  and  their  own  conception  of  duty. 
This  abuse  has  even  been  carried  so  far  that  the  editorial 
columns  of  leading  dailies  have  been  prostituted  by  the 
insertion  of  malicious  tirades  written  by  railroad  manag- 
ers and  railroad  attorneys;  and  the  fact  that  public 
opinion  has  not  been  more  seriously  influenced  by  these 
venal  sheets  must  be  solel}^  attributed  to  the  good  judg- 
ment and  safe  instinct  of  the  masses  of  the  people. 


Railroads  in  PnHlies.  229 

However  persistently  railway  organs  deny  it,  it  is  a 
matter  of  general  .notoriety  that  railwa}'  officials  take  an 
active  part  in  political  campaigns.  Hundreds  of  commu- 
nications might  be  produced  to  show  their  work  in  Iowa, 
but  the  following  two  letters,  written  by  a  prominent  rail- 
road manager  to  an  associate,  will  suffice  for  the  purpose. 
It  will  be  noticed  that  one  was  written  before  and  the 
other  after  election.  Comments  upon  their  contents  are 
unnecessary : 

" ,  Iowa,  Nov.  2nd,  1888. 

"  Dear  Sir:  I  have  just  discovered  this  p.  m.  that  the 
Central  Committee  have  sent  electrotypes  to  all  the  print- 
ing offices  in  the  State  of  the  State  ticket,  with  the  names 
of  the  Railway  Commissioners  and  Supreme  Judge  in  so 
small  a  space  as  to  make  it  very  difl3cult,  if  not  impossi- 
ble, to  write  in  the  names.  I  am  having  slips  made  with 
Commissioners'  names  and  Judge  written  on  them,  and 
they  will  be  sent  to  all  agents,  not  later  than  to-morrow, 
to  paste  over  the  printed  names  on  the  ticket,  and  thus 
beat  this  scheme.  Have  you  seen  any  tickets  yet?  And 
what  do  you  think  of  this  plan? 

' '  Yours  truly, 


" ,  Iowa,  Nov.  11,  1888. 

"  Dear  Sir:  Repeating  the  old  and  time-honored  say- 
ing: '  We  have  met  the  enemy  and  we  are  theirs.'  The 
Democratic  Granger  and  the  largely  increased  Republican 
vote  was  too  much  for  us.  Man}'  friends  voted  with  the 
railway  men,  but  to  no  purpose.  The  comparison  between 
Granger  and  Smyth  will  tell  more  than  anything  else  the 
strength  of  the  railway  vote.  But  we  are  badly  used  up, 
and  may  as  well  take  our  dose. 

' '  Yours  truly. 


While  the  result  of  this  election  was  indeed   a  bad  dose 
for  speculating  railway  managers,  it  is  the  opinion  of  the 


230  The  Railroad  Question. 

masses  and  of  railway  stockholders,  who  are  more  inter- 
ested in  the  general  welfare  of  the  roads  than  in  specula- 
tion in  their  stocks,  that  the  dose  was  well  administered, 
and  should  be  repeated  whenever  the  necessity  for  it  may 
again  arise. 

It  is  probably  true  that  railroad  managers  have  lost 
much  of  their  former  influence  in  politics.  As  their  means 
of  corruption  have  become  generally  known  they  have  be- 
come less  effective.  The  public  is  more  on  the  alert,  and 
corrupt  politicians  often  find  themselves  unable  to  carry 
out  their  discreditable  compacts. 

But  it  is  unreasonable  to  expect  the  evil  to  cease  until 
the  cause  is  removed.  The  trouble  is  inherent  in  the  sys- 
tem, and  the  fault  is  there  more  than  in  the  men  who 
manage  the  business,  and  not  till  the  great  power  exer- 
cised by  them  is  restrained  within  proper  limits  will  the 
evil  disappear.  All  this  can  be  accomplished  when  there 
shall  be  established  a  most  thorough  and  efficient  system 
of  State  and  National  control  over  the  railroad  business  of 
the  whole  country. 


CHAPTER  X. 


RAILROAD    LITERATURE. 


THE  cause  of  the  railroad  manager  has  never  been 
without  time-servers.  Not  to  speak  of  those  news- 
paper editors  who,  for  some  consideration  or  another, 
defend  every  policy  and  every  practice  inaugurated  or 
approved  by  railroad  authorities,  there  has  always  been  a 
school  of  literati  who  felt  it  their  duty  to  enlighten,  from 
a  railroad  standpoint,  their  fellow-men  by  book  or  pam- 
phlet upon  the  transportation  question,  to  correct  what 
they  supposed  to  be  false  impressions,  and  to  round  up 
with  au  apology  or  defense  for  the  railroad  manager,  who 
is  invariably  represented  by  them  as  the  most  abused  and 
at  the  same  time  most  patriotic  and  most  progressive  man 
of  the  age. 

The  benefits  derived  from  the  railroad  are  great.  It 
has  been  an  important  factor  in  the  development  of  our 
country's  resources  and  the  advancement  of  our  civiliza- 
tion. Its  value  is  fully  appreciated,  but  there  is  no  rea- 
son why  the  men  who  have  utilized  the  inventions  of 
Stephenson  and  others,  and  have  grown  rich  by  doing  so, 
should  be  eulogized  anj^  more  than  those  who  are  minis- 
tering to  the  wants  of  the  public  by  the  use  of  the  Hoe 
printing  press,  McCormick's  reaper,  AVhitney's  cotton 
gin,  or  any  of  the  thousands  of  other  modern  inven- 
tions. 

These  authors  doubtless  are  prompted  by  various 
motives.  Some  have  been  educated  in  the  railroad  school 
and  are  therefore  blind  to  railroad  evils.   Others  naturally 

231 


232  The  Railroad  Questian. 

worship  plutocrats,  because  they  hold  the  opinion  that 
capital  is  entitled  to  a  larger  reward  than  brains  and 
muscle,  for  the  reason  that  the  latter  is  more  plentiful 
than  the  former. 

But  there  is  a  third  class  of  railroad  authors,  who,  there 
is  reason  to  believe,  enter  the  literary  arena  in  defense  of 
railroad  evils  not  solely  for  the  love  they  bear  the  cause, 
but  as  the  paid  advocates  of  a  class  of  men  who  feel  that 
their  cause  is  in  need  of  a  strong  defense  at  the  bar  of 
public  sentiment.  It  would  be  difficult  to  account  in  any 
other  way  for  the  extravagant  statements  and  one-sided 
arguments  made  by  this  class  of  writers.  Yet  railroad 
literature  has  not  confined  itself  to  the  retrospective  field. 
Its  scope  has  grown  with  the  significance  of  its  contribu- 
tors. In  more  tiian  one  instance  have  men  at  the  head 
of  large  railroad  corporations,  influenced  by  temporary 
Interest,  become  the  authors  of  documents  containing 
assertions  and  prophecies  highly  pathetic  at  the  time,  but 
subsequently  shown  to  be  so  replete  with  falsehoods  and 
absurdities  that  few  railroad  managers  would  to-day  be 
willing  to  father  them.  Thus  Alexander  Mitchell,  the 
late  president  of  the  Chicago,  Milwaukee  and  St.  Paul 
Railroad  Company,  addressed  on  the  28th  of  April,  1874, 
shortly  after  the  passage  of  the  Wisconsin  Granger  Law, 
a  letter  to  Governor  Taylor,  containing  the  following 
passages : 

' '  That  it  [the  Wisconsin  law]  has  eflfectually  destroyed 
all  future  railroad  enterprises,  no  one  who  is  aquainted 
with  its  effect  in  mone}^  centers  will  for  a  moment  doubt. 
....  The  whole  amount  received  on  the  investment  [Chi- 
cago, Milwaukee  and  St.  Paul  Railroad]  for  interest  and 
cash  and  stock  dividends,  amounts  to  only  six  per  cent, 
per  annum  of  the  actual  cost  of  the  property.  I  submit 
to  your  Excellency,  and  through  j'ou  to  the  people  of  the 


Railroad  Literature.  233 

State,  whether  this  is  more  than  a  fair  and  reasonable 
return  for  the  capital  invested  in  these  improvements. 
Is  it  not  far  below  such  reasonable  amount?  The  best  and 
most  careful  economists  admit  that  no  less  than  ten  per 
cent,  per  annum  should  be  allowed  on  such  investments. 
....  The  directors  of  this  company  have  at  all  times  bad 
a  due  regard  to  the  interests  of  the  public,  and  a  desire 
to  furnish  transportation  at  the  lowest  possible  figures, 
and,  although  not  receiving  a  fair  and  reasonable  return  on 
their  investments,  they  have  for  the  last  four  years  prior 
to  1873  steadily  reduced  their  rates  of  freight  and  pas- 
sengers from  year  to  year,  as  will  be  seen  from  the  follow- 
ing tables,  showing  tlae  charge  for  freight  per  mile,  and 
the  average  per  mile  for  passengers  for  each  year,  from 
1868  to  1873  inclusive: 


Ch 
pe 

argesper  ton 
r  mile— cents. 

Average  passenger  rate 
per  mile— cents. 

1864 

04 

1868    . . . . 

.03 
.03 

40-100. . , 

03 

86-100 

1869    .... 

10-100.. 

03 

92-100 

1870   .... 

.02 

82-109.. 

03 

85-100 

1871    .... 

.02 

51-100.. 

03 

75-100 

1872    .... 

.02 

43-100.., 

-.03 

54-100 

1873 

.02 

50-100... 

03 

42-100 

' '  The  law  in  question  proposes  to  reduce  our  passenger 
rates  twenty-five  per  cent,  and  our  freight  rates  about  the 
same,  thus  deducting  from  our  present  tariff  about  twenty- 
five  per  cent,  of  our  gross  earnings.  .  .  .  This  act,  as  we 
have  seen,  proposes  to  take  from  us  twenty-five  per  cent, 
of  our  passenger  and  freight  earnings,  and  the  additional 
tax  of  one  per  cent,  of  our  gross  earnings,  all  of  which  is 
equivalent  to  taking  from  us  twenty-six  per  cent,  of  our 
gross  earnings.  Therefore,  deducting  this  amount,  equal 
to  twentj'-six  per  cent,  of  our  entire  gross  earnings,  from 
thirty-three  per  cent. ,  our  average  net  earnings  on  busi- 
ness, would  leave  us  only  seven  per  cent,  of  our  gross 
earnings  as  the  entire  net  earnings  of  the  road,  out  of 
which  must  be  paid  the  interest  on  the  bonds  and  the 
dividends  to  our  stockholders.  It  is  therefore  manifest 
that  this  law  will  take  from  us  over  three-fourths  of  the 
net  income  received  under  our   present   tariff.  .  .  .  The 


234  Tlir  Railruad  Question. 

board  of  directors  have  caused  this  act  to  be  carefulh'  ex- 
amined and  considered  by  their  own  counsel,  and  by  some 
of  the  most  eminent  jurists  in  the  land,  and  after  such 
examination  they  are  unanimous  in  their  opinion  that  it  is 
unconstitutional  and  void.  .  .  .  The  board  of  directors  are 
trustees  of  this  propert}',  and  are  bound  faithfully  to  dis- 
charge their  trust,  and  to  the  best  of  their  ability  to  pro- 
tect it  from  spoliation  and  ruin.  Thej'  have  sought  the 
advice  of  able  counsel,  and,  after  mature  consideration, 
believe  it  their  duty  to  disregard  so  much  of  said  law  as 
attempts  arbitrarily  to  fix  rates  of  compensation  for  freight 
and  passengers.  .  .  .  Being  fully  conscious  that  the  en- 
forcement of  this  law  will  ruin  the  property  of  the  company', 
and  feeling  assured  of  the  correctness  of  the  opinions  of 
the  eminent  counsel  who  have  examined  the  question,  the 
directors  feel  compelled  to  disregard  the  provisions  of  the 
law  so  far  as  it  fixes  a  tariff  of  rates  for  the  company, 
until  the  courts  have  finally  passed  upon  the  question  of 
its  validity."' 

The  letter  was  at  the  time  regarded  b}^  railroad  men  as 
a  ver}'  strong  document,  and  the  railroad  journals  were 
filled  with  lengthy  editorials  in  praise  of  the  soundness  of 
the  doctrines  and  arguments  which  it  contained.  The 
disinterested  of  the  enlightened  portion  of  the  communit}' 
even  then  realized  that  the  "eminent  jurists"  whom  the 
company  had  consulted  were  hired  attorneys  and  greatly 
biased  in  their  views  as  to  the  constitutional  rights  Ox"  cor- 
porations, and  that  President  Mitchell  on  his  part  had 
painted  by  far  too  dark  a  picture  of  the  situation.  It  is 
now  quite  generally  admitted  that  many  of  Mr.  Mitchell's 
statements  were  as  false  as  his  counsel  s  interpretation  of 
the  Constitution  and  the  law  was  erroneous.  From 
the  assertions  made  in  this  letter  one  is  led  to  infei- 
that  the  then  stock-  and  bondholders  of  the  Milwau- 
kee road  had  paid  in  full  every  dollar  of  the  capital- 
ized value  of   the  road,  and  that  the}-  derived  from  their 


Railroad  Literature.  235 

investment  an  income  of  only  about  six  per  cent,  on  the 
money  actually  invested  by  them.  The  cost  of  the  entire 
Chicago  and  Milwaukee  system  in  Wisconsin  was  stated 
in  the  letter  as  being  $38,000  per  mile.  It  is  not  likel}' 
that  this  line  of  road  ever  cost  to  exceed  $25,000  a  mile, 
or  that  those  who  then  owned  the  road  paid  much  more 
than  two-thirds  of  its  actual  cost  for  it.  The  road,  as  the 
letter  itself  admits,  was  bought  at  sheriff's  sale,  and  no 
mercy  whatever  was  shown  to  the  farmers  who  had  mort- 
gaged their  farms  to  aid  the  railroad  company  in  raising 
funds  for  the  construction  of  its  line. 

The  letter  contains  other  misstatements  equaily  grave. 
Mr.  A.  B.  Stickney,  the  president  of  the  Chicago,  St. 
Paul  and  Kansas  City  Railroad,  in  his  recent  excellent 
work,  "The  Railway  Problem,  "  reviews  Mr.  MitcheH's 
letter  as  follows :  , 

"Mr.  Mitchell  states  the  average  rate  per  mile  in  1873 
for  passengers  at  3.42  cents.  It  was  well  understood 
that  this  was  an  average  rate  receiA'ed  from  those  passen- 
gers who  paid  an3-thing,  and  that,  had  the  average  rate 
been  obtained  by  using  as  a  divisor  the  total  number  of  pay- 
ing passengers  plus  the  number  of  those  who  rode  free 
the  average  would  have  been  much  below  three  cents,  the 
price  fixed  by  the  law,  and  consequently,  if  the  company 
would  collect  the  legal  rate  from  all  alike  and  abolish  the 
free  list,  its  revenues  from  the  passenger  business  would 
be  increased  rather  than  decreased.  If  the  same  test  is 
applied  to  the  freight  rates  it  becomes  equally  evident  that 
this  statute  did  not  reduce  the  rates  in  Wisconsin  below 
the  average  rate  of  2.50  cents  per  ton  per  mile,  which, 
according  to  Mr.  Mitchell's  statement,  was  the  average  for 
the  year  1873.  For  proof,  it  may  be  stated  that  the  law 
classified  freight  into  four  general  classes,  to  be  designated 
as  first,  second,  third  and  fourth  classes,  and  into  seven 
special  classes,  to  Ije  designated  as  D,  E,  F,  G,  H,  I  and 
J.     The  rates  on  the  four  general  classes  were  made  the 


236  The  Railroad   Question. 

same  as  were  '  charged  for  carrying  freights  in  said  four 
general  classes  on  said  railroads  on  the  first  day  of  June, 
1873,'  and  the  rate  per  ton  per  mile  was  fixed  at  certain 
rates  for  the  first  twenty-five  miles,  a  less  for  the  second 
twenty-five  miles,  and  a  fixed  rate  per  mile  after,  as 
follows: 

1st  35  Miles  2nd  25  Miles .  All  Over  50  Miles . 

D 4  4-a  cents 3  l-o  cents 1  3-5  cents. 

E Same  as  class  above. 

F 4        cents 3        cents 1         cent, 

G 3  1-5  cents 3        cents 1         cent. 

H 4        cents 2  4-5  cents 1  3-5  cents. 

1 4  2-5  cents 2  2-5  cents 1  1-5  cents. 

J 3  1-5  cents     ...  .2  2-5  cents 1         cent. 

"When  it  is  considered,  in  connection  with  these 
figures,  thai,  the  four  general  classes  were  left  by  the  legis- 
lature under  the  same  tarifl's  as  had  been  enforced  by  the 
companies,  and,  as  a  rule,  first  class  is  three  times  the  rate 
of  class  D,  and  third  and  fourth  class  materially  higher, 
the  evidence  seems  conclusive  that  the  rates  fixed  by  law 
would  produce  an  average  materially  higher  than  the  aver- 
age of  the  whole  year,  stated  by  Mr.  Mitchell  at  2^  cents. 
It  seems  also  probable  that,  had  the  rates  fixed  by  this  law 
been  applied  to  the  whole  business  of  the  lino,  the  inter- 
state as  well  as  the  State  traffic,  it  would  still  have  pro- 
duced a  larger  average.  The  latter  of  course  is  the  proper 
test.  There  are  little  inaccuracies  in  the  material  facts  as 
stated  by  Mr.  JMitchell  which  were  pointed  out  at  once. 
For  example:  In  his  tabulated  statement  of  passenger 
earnings  per  mile,  aA'eraging  the  gross  earnings  from 
transportation  of  passengers  who  paid  any  fare,  and  omit- 
ing  the  large  number  who  went  free,  the  rate  is  stated  at 
3  42-100  cents  per  mile;  then  he  says:  'The law  in  ques- 
tion proposes  to  reduce  our  passenger  rate  twenty-five 
per  cent.,'  which  would  have  reduced  the  rate  to  2.57 
cents  per  mile,  while  the  rate  fi_xed  by  the  law  complained 
of  was  three  cents  per  mile.  Then  Mr.  Mitchell  proceeds: 
'  And  our  freight  rates  about  the  same ;  thus  deducting 
from  our  present  tariff  about  twent3"-five  per  cent,  of  our 
gross  earnings. '  It  was  immediatel}"  pointed  out  that  the 
law   only   applied    to  strictly  State  business,  that  is,  to 


Hail  road  Literature.  237 

# 
traffic  that  originated  and  ended  in  the  State  of  Wisconsin. 
All  other  traffic  was  interstate  commerce,  and  could  not  be 
controlled  by  State  legislation.  The  volume  of  business 
which  would  be  affected  by  the  law  would  therefore  i»e 
comparatively  small — estimated  at  not  over  ten  per  cent, 
of  the  total  traffic  of  the  line.  Hence,  if  the  rates  fixed 
by  the  law  were  twent3--five  per  cent,  less  than  the  rates 
the  compan}'  had  been  in  the  habit  of  collecting  (which 
was  denied),  it  could  not  possibly  have  '  deducted  from  its 
present  tariff '  more  than  two  and  one-half  per  cent. ,  in- 
stead of  twenty-five  per  cent,  as  stated  by  Mr.  Mitchell. 

' '  It  was  claimed  that  the  facts  were,  that  the  Chicago, 
Milwaukee  and  St.  Paul  Company,  in  its  efforts  to  bank- 
rupt the  Lake  Superior  and  Mississippi  Company,  had 
many  of  its  interstate  rates  so  low  that  it  had  resulted  in 
loss,  and  that  its  other  rates  had  been  made  unreasonably 
high  in  order  to  recoup  this  loss,  and  that  the  State  of 
Wisconsin  was  compelled  to  pay  a  part  of  the  expense 
of  the  transportation  of  favored  sections  of  the  State  of 
Minnesota." 

All  through  the  Granger  contests  the  railwa3'S  have 
weakened  the  force  of  their  arguments  by  their  misrepre- 
sentation of  facts  and  by  their  extravagant  predictions  of 
ruin.  The  companies  were  continually  proclaiming :  '  If 
this  or  that  is  done,  it  will  ruin  us ;  it  will  ruin  the  State, ' 
when,  in  fact,  a  road  cannot  be  mentioned  that  has  suf- 
fered from  State  legislation.  Nineteen  years  ago  no  rail- 
road manager  could  have  written  what  Mr.  Stickney  writes 
to-day,  and  few  railroad  managers  would  write  to-day 
what  Mr.  Mitchell  wrote  then.  And  yet,  such  is  the 
change  which  public  sentiment  is  undergoing  upon  these 
questions,  that  the  utterances  of  many  of  our  present 
railroad  authors  will  appear  as  absurd  a  few  years  hence 
as  Mr.  Mitchell's  letter  of  nineteen  years  ago  appears  to 
us  now. 

Many  railroad  attorneys  have  since  been  guilty  of  resort- 


Tilt    Railnjiid    Qar.stiuii. 


ing  to  the  sophistry  employed  by  President  Mitchell  in 
that  strange  letter  which  he  addressed  to  the  Grovemor  of 
Wisconsin.  Even  so  distinguished  a  gentleman  as  Hon. 
James  W.  McDill,  now  a  member  of  the  Interstate  Com- 
merce Commission,  made  in  1888,  as  a  member  of  a  railroad 
lobby,  the  following  remarkable  statements  before  the  Rail- 
road Committee  of  the  General  Assembly  of  Iowa,  in  a 
speech  opposing  a  proposed  reduction  of  the  passenger 
rate  of  first-class  roads  from  three  to  two  cents  per  mile : 

"  The  proposition,  if  confined  to  the  first-class  roads  of 
Iowa,  proposes  a  one-third  reduction  of  their  revenues 
from  passenger  business.  .  .  .We  have  earned  in  Iowa  by 
first-class  roads  annually  about  $13,000,000,  and  a  reduc- 
tion of  one  cent,  or  from  a  rate  of  three  cents  to  two,  will 
reduce  their  revenues  about  $5,000,000  a  year.  .  .  .  Thus 
it  is  seen  that  it  is  proposed  to  take  from  the  revenues  of 
a  part  of  the  railroads  of  Iowa,  annually,  almost  as  much 
as  all  the  railroads  of  Iowa  have  paid  for  taxes  in  nine 
years  ($6,549,505.84)." 

Mr.  McDill  was  a  member  of  the  Iowa  Railroad  Com- 
mission for  several  years.  He  may,  therefore,  be  pre- 
sumed to  have  known  that  the  State  of  Iowa  could 
not,  and  did  not  propose  to,  regulate  interstate  traffic, 
and  that  the  thirteen  million  dollars  railroad  revenue 
to  which  he  referred  was  derived  both  from  interstate 
and  State  traffic;  that  the  latter  was  onl}- about  one-fourth 
of  the  former,  and  that  therefore  the  proposed  reduction 
on  the  basis  of  schedule  rates  would  have  cut  down  the 
net  revenue  of  the  roads  only  about  one  million  instead  of 
five  million  dollars.  But  Mr.  McDill  himself  states  that 
the  average  rate  earned  by  all  the  railroads  of  the  United 
States  was,  for  the  year  1886,  only  2. 181  cents  per  passen- 
ger per  mile.  It  certainly  was  not  over  2^  cents  per 
mile  for  the   first-class  roads  of  Iowa.     Thus   the  pro- 


Iluiirn,,,!    Llt,r„t,ir>  .  239 

posed  reduction,  instead  of  being  one  cent  per  mile,  as 
stated  by  Mr.  McDlll,  was  only  one-half  cent  per  mile  ; 
and  it  onl}'  applied  to  the  local  business  of  the  first-class 
roads.  In  other  words,  the  bill  under  consideration,  had 
it  been  enacted  into  law,  would  have  caused  a  reduction  of 
20  per  cent,  on  about  25  per  cent,  of  the  total  revenue 
from  passenger  business  of  the  first-class  roads,  or  of  five 
per  cent,  on  their  total  income  from  passenger  traffic  in 
the  State  of  Iowa.  It  will  be  noticed  that  ]Mr.  McDill  in 
his  calculation  made  no  allowance  whatever  for  the 
increase  of  business  which  would  have  followed  such  a 
reduction.  The  gain  from  this  source  would  probably 
have  greatly  Exceeded  the  loss  due  to  this  small  reduction 
in  the  fare.  In  the  same  address  Mr.  McDill  made  many 
other  equally  fallacious  statements. 

One  of  the  most  devoted  advocates  of  the  interests  of 
railroad  managers  is  Marshall  M.  Kirkman.  He  is  the 
author  of  a  number  of  books  and  pamphlets  upon  railway 
subjects,  among  them  a  pamphlet  entitled  ' '  The  Relation 
of  the  Railroads  of  the  United  States  to  the  People  and 
the  Commercial  and  Financial  Interests  of  the  Country. " 

Mr.  Kirkman  introduces  his  subject  with  the  following 
rather  remarkable  statement: 

"  I  shall  show  that  while  the  railways  of  the  United 
States  are  designated  as  monopolies,  thej^  are  not  so  in 
fact.  Accused  of  disregarding  the  interests  of  the  com- 
munity, I  will  show  that  they  are  abnormally  sensitive  to 
their  obligations  in  this  direction.  While  legislatures 
claim  the  right  to  fix  rates,  I  shall  show  that  the  abnor- 
mal conditions  under  which  the  railway  sj'stem  has  grown 
up  and  its  chaotic  nature  render  the  exercise  of  such  a 
privilege  impossible.  I  will  show  that  while  it  is  assumed 
that  rates  may  be  fixed  arbitrarily,  they  must,  on  the 
contrary,  be  based  on  natural  causes,  the  competition  of 
carriers,  their  necessities  and  the  rivalries  of  conflicting 


240  The  Railroad  Question. 

markets  and  trade  centers;  conditions  manifestly  impos- 
sible to  determine  or  regulate  in  advance,  and  therefore 
beyond  the  control  of  legislation.  .  .  .  While  a  di\ision  of 
business  (by  pooling)  is  thought  to  be  contrary  to  the 
interests  of  the  people,  I  shall  show  that  it  is  the  legiti- 
mate fruit  of  indiscriminate  railway  building  and  offers 
the  only  escape  from  the  conditions  such  practice  engen- 
ders. I  shall  show  that,  while  it  is  assumed  that  rates  may 
be  based  progressively  or  otherwise  on  distance,  the 
enforcement  of  such  a  principle  would  restrict  the  source 
of  suppl}',  and,  in  so  far  as  this  was  the  case,  render 
great  markets  or  centers  of  industry  impossible." 

Speaking  of  the  importance  of  the  railroad,  Mr.  Kirk- 
man  says :  ' '  Superseding  every  other  form  of  inland  con- 
veyance, it  determines  the  location  of  business  centers,  and 
vitalizes  by  its  presence,  or  blasts  bjMts  absence."  He 
contends  that  rigid  and  scrutinizing  supervision  should  be 
exercised  by  the  Government  over  the  location  of  railroads, 
and  that  only  such  lines  should  be  permitted  to  be  built  as 
afford  reasonable  grounds  for  profitable  enterprise.  '  *  It 
should  be, "  he  says,  "an  axiom  in  our  day  that  a  gov- 
ernment that  permits  or  encourages  the  construction  of 
two  railways  where  one  would  suffice  is,  to  the  extent 
that  it  does  this,  a  public  nuisance. "  Mr.  Kirkman  here 
makes  it  the  duty  of  the  Government  to  arbitrarily  meddle 
with  railroad  affairs.  He  would  give  the  Government  the 
power  to  determine  when  and  where  an  additional  rail- 
road is  needed,  and  to  prohibit  the  construction  of  any 
new  road  that  has  not  the  Government  sanction.  The 
interests  of  a  thousand  towns  might  suffer  for  want  of 
adequate  transportation  facilities,  individuals  and  com- 
munities might  be  anxious  to  build  their  own  lines  for  the 
development  of  local  resources,  but  all  railroad  enterprise 
is  doomed  to  a  standstill  until  a  conservative  govern- 
mental commission  has  been  entirely  satisfied  that  a  pros- 


Railroad  Literature.  241 


pected  road  will  pa}'  arid  not  deprive  existing  roads  of 
any  part  of  their  revenue.  There  can  be  no  doubt  that  if 
such  a  policy  were  ever  adopted  in  America,  few  roads 
would  be  built  witliout  having  lirst  passed  the  ordeal  of  a 
legal  injunction,  and  many  a  prospected  road,  though 
greatly  needed,  would  remain  unbuilt  because  its  pro- 
moters would  be  discouraged  by  the  delay  and  cost  of  liti- 
gation."' 

But  while  this  author  is  pei'fectly  willing  to  trust  the 
Government  with  the  great  responsibility  of  prohibiting 
the  construction  of  proposed  roads,  he  is  not  willing  to 
have  it  exercise  the  power  to  determine  what  are  reason- 
able rates.  He  tries  to  sustain  his  objection  by  the  fol- 
lowing argument:  "  The  fixing  of  rates  upon  a  railroad 
is  as  delicate  a  process  as  that  of  determining  the  pulse 
of  a  sick  man.  They  cannot  be  determined  abstractly, 
or  in  advance  of  the  wants  of  business,  but  must  be 
adjusted  from  hour  to  hour  to  conform  to  its  fluctuations. 
Five  thousand  men  find  active  employment  in  the  United 
States  in  connection  with  the  important  duty  of  making 
rates.  Each  case  requires  particular  investigation  and 
involves,  in  many  instances,  prolonged  study  and  research. 
The  duty  requires  men  of  marked  experience  and  capacity. 
They  and  men  like  them  are  the  silent,  unseen  power  that 
moves  great  enterprises  of  every  nation.  In  the  case  of 
railroads  we  may  enumerate  those  having  official  positions, 
but  the  experts  from  whom  the  official  heads  derive  infor- 
mation and  assistance  cannot  be  classified.  They  com- 
prise a  vast  army  of  experienced  and  able  men  familiar 
with  railway  traffic  and  quick  to  respond  to  its  require- 
ments. Such  a  body  of  men  could  not  lie  organized  by  a 
government,  or,  if  organized,  Avould  rapidly  deteriorate 
under  conditions   so   unfavorable   for  their  support  and 


242  The  Railnxul   Qiusfion. 


development.  Whatever  authority  exercises  the  duty  of 
fixing  rates  must  take  up  the  subject  in  the  same  method- 
ical way  and,  acting  through  skilled  agents,  pursue  its 
inquiries  and  determine  its  results  with  the  same  exper- 
ience, minute  care  and  conscientious  regard  for  the  tech- 
nical-requirements of  business  that  the  railway  companies 
observe.  No  government  can  possess  the  facilities  for 
perfecting  so  vast  and  intricate  an  organization  and  at  the 
same  time  render  it  responsive  to  the  public  good.  The 
labor  is  too  great  and  the  responsibility  too  remote.  It 
could  not  move  with  sufficient  quickness  to  respond  to  the 
actual  requirements  of  trade,  and  too  many  restrictions 
would  necessarily  govern  its  actions.  For  these  and  other 
equally  important  reasons  governments  must  always  be 
satisfied  to  restrict  their  offices  in  this  direction." 

Speaking  of  the  men  who  are  commonly  termed  railroad 
magnates,  Mr.  Kirkman  says :  < '  They  alone  possess  the 
needed  administrative  ability  that  the  situation  demands. 
They  not  only  provide  largeh'  the  capital,  but  they  dis- 
cover the  fields  wherein  ,it  may  be  used  most  advantag- 
eously. They  are  the  advance  guard  of  all  great  enter- 
prises, the  natural  leaders  of  men.  They  are  an  integral 
part  of  the  country,  a  necessary  and  valuable  element, 
without  which  its  natural  resources  would  avail  little." 
This  is  a  very  strong  statement  in  the  face  of  the  fact 
that  but  ver}^  few  of  the  class  of  men  to  whom  Mr.  Kirk- 
man refers  ever  built  a  line  of  road.  They  have  usually 
found  it  more  profitable  to  "gobble"  roads  already  built 
than  to  construct  new  lines. 

According  to  this  author  the  public  have  no  reason  to 
complain  of  railroads;  on  the  contrary,  the  latter  have 
always  been  the  victims  of  public  persecution,  and  ' '  every 
species  of  folly,  every  conceivable  device  of  malice,  the 


Railroad  Literature.  243 

impossible  requirements  of  ignorance,  tlie  selfish  cunning 
of  personal  interests,  the  ravings  of  demagogues,  ^ihe  dis- 
appointments, euAies,  prejudices  and  jealousies  of  man- 
kind have  each  in  turn  and  in  unison  sought  to  injure  the 
railway  interest.  ' 

But  probabl}'  the  most  extravagant  passage  in  the 
whole  treatise  is  the  one  referring  to  special  rates,  which 
he  calls  "  the  foundation  and  buttress  of  business,"  with- 
out which  it  could  not  be  carried  on.  He  expresses  the 
opinion  that  without  the  continued  and  intelligent  use  of 
such  rates  ' '  our  cities  would  soon  be  as  destitute  of  man- 
ufactories as  one  of  the  bridle  paths  of  Afghanistan,"  and 
then  continues:  "The  special  rate  of  carriers  is  like  the 
delicate  fluid  that  anoints  and  lubricates  the  joints  of  the 
human  body.  It  is  an  essential  oil.  AYithout  it  the 
wheels  of  commerce  would  cease  and  w^e  should  quickly 
revert  to  the  period  when  the  stage-coach  and  the  over- 
land teamster  fixed  the  limits  of  commerce  and  the  stature 
of  cities." 

The  most  recent  and  probably  the  most  radical  of  Mr. 
Kirkman's  books  is  "Railway  Rates  and  Government 
Control. "  It  would  lead  us  too  far  from  our  subject  to 
enter  into  a  discussion  of  Mr.  Kirkman's  errors  ;  in  fact, 
it  might  prove  an  endless  task.  Suffice  it  to  say  that  in 
discussing  his  subject  he  revels  in  such  phrases  as  : 
"  Subject  too  vast  to  be  comprehended."  "  Acts  of  agra- 
rian legislation  and  foolish  manifestations  of  disappoint- 
ment and  hate. "  "The  rabble. will  avail  itself  of  every 
excuse  to  pass  laws  that  would,  under  other  circumstances, 
be  called  robberies."  "Ignorance  and  demagogism." 
"Government  interference,  the  panacea  of  cranks  and 
schemers."  "Only  understood  by  the  few."  "These 
people  are  as  sincere  as  they  are  ignorant. "'      "Govern- 


244  TJie  Railroad  Question. 

ments  have  no  commercial  sense. "  ' '  Those  who  condemn 
them  are  not  so  dishonest  as  ignorant,  and  not  so  malici- 
ous as  foolish."  "  Silly  people."  "Justice  and  common 
honesty  are  sj'stematically  denied  [tlie  railroads]."  "Legal 
means  of  plundering  them."  "  The  intelligence  and  facili- 
ties of  Government  are  but  one  step  above  the  barbarian." 
"  Those  who  use  railroads  should  pay  for  them,"  etc.,  etc. 

Mr.  Kirkmans  argument  is  in  substance  :  Rate-making 
is  a  difficult  subject.  The  people  are  too  ignorant  to  under- 
stand it.  Those  who  carry  on  the  Government  are  for  the 
most  part  fools  and  demagogues,  and  are  utterly  unfit  to  do 
justice  to  such  a  task.  Railroad  men  are  wise  and  just,  and 
neither  the  people  nor  the  Government  should  meddle  with 
the  railroad  business.  In  order  to  place  a  true  estimate 
upon  Mr.  Kirkmans  utterances,  one  should  remember 
that  he  is  a  railroad  employe  as  well  as  the  patentee  and 
vendor  of  a  number  of  railroad  account  forms  which  are 
extensively  used  by  railroad  companies. 

The  Chicago  I'rihiDie,  in  reviewing  this  last  literary  pro- 
duction of  Mr.  Kirkman,  says  : 

"The  great  fault  of  Mr.  Kirkman's  statements  is  that 
they  are  often  so  general  in  character  as  to  be  both  true 
and  false  at  the  same  time.  .  .  .  He  does  not  seem  to 
comprehend  the  nature  of  the  railroad,  or  to  perceive  the 
danger  of  allowing  a  railroad  to  exercise  its  powers  uncon- 
trolled. He  denies  the  State's  right  to  interfere  with  any 
discriminations  which  a  railway  corporation  chooses  to 
adopt.  He  would  allow  I'ailways  to  fix  whatever  charges 
they  please  for  long  hauls  and  short  hauls.  .  .  .  Mr.  Kirk- 
man does  not  adduce  a  single  fact  in  support  of  these  re- 
markable views.  He  simply  says  :  '  Railroads  cannot, 
if  they  would,  maintain  any  int^quitable  local  tariff.' 
This  is  not  argument,  it  is  simpl}'  as.sertion.  Every  one 
who  has  learned  the  alphabet  of  this  question  knows  that 
railways  have  been  exceedingly  unjust  wherever  competi- 


Railroad  Literature.  245 


tion  or  the  law  did  not  restrict  their  powers.  If  this  were 
the  proper  phice  for  it  we  would  give  the  author  instances 
of  this  injustice  by  the  hundred,  and  almost  any  book 
on  the  subject  refers  to  such  cases  by  the  thousand.  .  .  . 
When  confronted  with  the  facts  sul)stautiating  such 
charges  the  author  answers  the  argument  by  exclaiming: 
But  how  absurd!  But  how  untrue!  Our  commercial 
morals  are  equal  to  the  highest  in  the  world.'  .  .  . 
Scarcely  an  assertion  can  be  taken  without  qualification. 
The  author  fairly  revels  in  half-truths.  .  .  .  The  book 
maj'  have  its  merits,  but  they  are  too  modest  to  reveal 
themselves." 

It  is  a  falling  of  mankind  to  take  for  truth  without 
further  investigation  any  assertion  that  has  often  been  re- 
iterated. Most  people  are  prone  to  believe  that  an  asser- 
tion made  by  a  thousand  hearsay  witnesses  is  true,  over- 
looking the  possibility  of  their  drawing  from  a  common 
false  source.  But  it  is  surprising  that  an  author  like 
Prof.  Arthur  T.  Hadley  should  fall  into  such  an  error.  In 
his  otherwise  excellent  work,  "  Kailroad  Transporta- 
tion, Its  History  and  Its  Laws,"  Mr.  Hadley  bases  a  num- 
ber of  his  deductions  upon  false  premises  advanced  by 
railroad  managers,  and  arrives  at  conclusions  which  appear 
strange  when  their  source  is  considered.  In  the  chapter 
on  railroad  legislation  Professor  Hadley  says:  "But 
a  more  powerful  force  than  the  authority  of  the  courts 
was  working  against  the  Granger  system  of  regula- 
tion. The  laws  of  trade  could  not  be  violated  with  im- 
punity. The  effects  were  most  sharply  felt  in  Wisconsin. 
The  law  reducing  railroad  rates  to  the  basis  which  competi- 
tive points  enjoyed  left  nothing  to  pay  fixed  charges.  In 
the  second  year  of  its  operation,  no  Wisconsin  road  paid  a 
dividend ;  only  four  paid  interest  on  their  bonds.  Railroad 
construction  had  come  to  a  standstill.  Even  the  facilities 
of  existing  roads  could  not  be  kept  up.     Foreign  capital 


246  The  Railroad  Question. 

refused  to  invest  in  Wisconsin  ;  the  development  of  the 
State  was  sharply  checked  ;  the  very  men  who  had  most 
favored  the  law  found  themselves  heavy  losers.  .  .  .  By 
the  time  the  Supreme  Court  published  the  Granger  decis- 
ions, the  fight  had  been  settled,  not  by  constitutional  limi- 
tations, but  by  industrial  ones." 

These  statements  are  either  utterly  untrue  or  greatly 
misleading.  Mr.  Hadley  ought  to  know  that  the  railroad 
companies  in  the  Granger  States  never  complied  With  the 
letter,  much  less  with  the  spirit  of  the  law.  Whenever 
they  made  an  apparent  effort  to  live  up  to  it  they  only  did 
so  to  make  it  odious.  Rates  were  never  reduced  by  the 
legislature  to  the  basis  previously  enjoyed  by  competitive 
points,  but  merely  to  the  average  charge  which  had 
obtained  before  the  passage  of  the  law.  As  a  rule  the 
railroad  revenues  increased.  If  any  companies  failed  to 
earn  enough  to  pay  fixed  charges  it  was  simply  because 
they  were  determined  not  to  do  so.  A  non-payment  of 
dividends  did  not  injure  the  managers,  but  simply  other 
stockholders  of  the  road.  A  permanent  establishment  of 
the  principle  of  non-discrimination,  on  the  other  hand, 
would  have  benefited  stockholders,  while  prejudicing  the 
speculative  interest  which  managers  had  in  the  roads. 
Railroad  construction  came,  after  the  financial  panic  of 
1873,  to  a  practical  standstill  throughout  the  United 
States  ;  and  if  the  Granger  States  did  not  get  their  share 
of  the  very  small  total  increase  during  the  five  years  fol- 
lowing the  panic,  it  was  due  solely  to  a  conspiracy  on  the 
part  of  the  railroad  managers  to  misrepresent  and  pervert 
the  legislation  of  these  States.  The  laws,  as  has  already 
been  stated,  were  finally  repealed,  not  because  the  people 
had  tired  of  them  or  regarded  them  unwise  or  unjust,  but 
because  it  was  hoped  that  the  commissioner  system  would 


Railroad  Literature.  247 

prove  more  efficient.  It  was  offered  as  a  compromise 
measure  and  Avas  accepted  as  such  hy  the  railroad  mana- 
gers, Avho,  in  their  eagerness  to  rid  themselves  of  the 
restrictions  imposed  by  the  Granger  laws,  gave  every 
assurance  of  complete  submission  to  the  requirements  of 
the  proposed  legislation . 

Mr.  Hadley  even  goes  so  far  as  to  defend  railroad  pools. 
"  Unluckil}',"  he  says,  "we  place  these  combinations  out- 
side of  the  protection  of  the  law,  and  by  giving  them  this 
precarious  and  almost  illegal  character  we  tempt  them  to 
seek  present  gain,  even  at  the  sacrifice  of  their  own  future 
interests.  We  regard  them,  and  we  let  them  regard 
themselves,  as  a  means  of  momentary  profit  and  specula- 
tion, instead  of  recognizing  them  as  responsible  public 
agencies  of  lasting  influence  and  importance."  We  can 
partially  account  for  this  author's  defense  of  pooling 
when  we  are  informed  that  he  accepts  it  as  an  axiom  that 
"combination  does  not  produce  arbitrary  results  any  more 
than  competition  produces  beneficent  ones. "  Referring  to 
railroad  profits,  Mr.  Hadley  says  :  ' '  The  statement  that 
corporations  make  too  much  money  is  scarcely  borne  out 
by  the  facts.  The  average  return  of  the  railroads  of  this 
country  is  only  four  per  cent. ,  the  bondholders  receiving 
an  average  of  four  and  a  half  per  cent. ,  the  stockholders 
of  two  and  a  half  per  cent.  True,  much  of  the  stock  is 
water,  not  representing  any  capital  actually  expended; 
but,  even  making  allowance  for  this,  it  is  hardly  probable 
that  the  roads  are  earning  more  than  five  per  cent,  on  the 
total  investment.  This  assumes  an  average  cost  of 
$45,000  per  mile,  implying  that  about  half  of  the  stock 
and  one-sixth  of  the  bonds  are  water."  Mr.  Hadley 
would  probably  have  come  much  nearer  the  truth  if  he 
had  assumed  three-fourths  of  the  stock  and  one-fourth  of 


248  The  Rttlh'oad   Quest  ion  . 

the  bonds  to  be  water.  Even  Mr.  Poor,  who  certainly 
cannot  be  accused  by  railroad  men  of  being  inimical  to 
their  interests,  places  the  average  cost  of  the  railroads  of 
this  country  no  higher  than  at  $30,000  per  mile  ;  and  this 
estimate,  it  should  be  remembered,  includes  the  value  of 
the  large  donations  made  to  railroad  companies  by  the 
public.  With  a  full  understanding  of  all  the  circum- 
stances, Mr.  Poor  said  of  railroad  investments  several 
years  ago  that  if  the  water  were  taken  out  of  them  no 
class  of  investments  in  this  country  would  pay  as  well. 
In  the  face  of  this  statement  Mr.  Hadley  would  do  well 
to  revise  his  figures. 

We  find,  however,  in  Prof.  Hadley' s  book  also  emi- 
nently sound  views,  like  the  following:  "  If  the 
object  of  a  railroad  manager  is  simply  to  pay  as  large 
a  dividend  as  possible  for  the  current  3'ear,  he  can  best 
do  it  by  squeezing  his  local  tariff,  of  which  he  is  sure, 
and  securing  through  traffic  at  the  expense  of  other  roads 
by  specially  low  rates  ;  that  is,  b}'  a  policy  of  heavy  dis- 
crimination. But  the  permanent  effect  of  such  a  policy 
is  to  destroy  the  local  trade,  which  gives  a  road  its  best 
and  surest  custom,  and  to  build  up  a  trade  which  can  go 
by  another  route  whenever  it  pleases.  The  permanent 
effect  of  such  a  policy  is  ruinous  to  the  railroad  as  well  as 
the  local  shipper."  And  he  continues:  "By  securing 
publicity  of  management  you  do  much  to  prevent  the  per- 
manent interests  of  the  railroads  from  being  sacrificed  to 
temporary  ones.  By  protecting  the  permanent  interests 
of  the  public  you  enlist  the  stockholders  and  the  best  class 
of  railroad  managers  on  the  side  of  sound  policy. " 

Edward  Atkinson,  in  an  essay  entitled  ' '  The  Kailway, 
the  Farmer  and  the  Public, ''  endeavors  to  prove  that  the 
farmers  have  no  cause  for  complaining  against  the  railroad, 


RaUroad  Literature.  249 

because  rates  of  transportation  have  been  greatly  reduced 
during  the  past  twenty  years.  Speaking  of  the  reductions 
made  in  freight  rates  in  the  State  of  New  York,  he  says: 
"  Had  the  rate  of  1870  been  charged  on  the  tariflf  of  1883 
the  sum  would  have  been  at  1.7016  cents  on  9,286,216,- 
628  tons,  carried  one  mile,  $158,014,262;  the  actual 
charge  was  $83,464,919,  making  a  diflference  of  $74,549,- 
343  saved  on  one  year's  traffic  on  the  lines  reported  in 
New  York. "  It  either  did  not  occur  to  Mr.  Atkinson,  or, 
if  it  did  occur  to  him,  he  failed  to  mention  it,  that  these 
freight  reductions  were  forced  upon  the  railroads  chiefly 
by  water  competition,  and  that  if  the  railroad  companies 
had  not  saved  these  seventy-four  million  dollars  for  the 
people,  the  canal  lines,  always  subject  to  competition, 
would  have  saved  a  large  part  of  it.  With  equal  pro- 
priety might  it  be  said  that  the  railroads,  by  meeting 
canal  competition,  saved  for  themselves  in  the  year  men- 
tioned a  goodly  share  of  their  gross  eai'nings.  Such 
reasoning  is  absurd,  and  it  is  high  time  that  the  bubble  of 
an  argument  so  often  used  by  railroad  advocates  be 
pricked.  As  Mr.  Atkinson  has  introduced  the  farmer,  let 
us  apply  his  rule  to  him.  There  was  a  time  when  the 
farmer  sold  his  corn  for  a  dqllar  a  bushel.  To-day  he  sells 
it  for  thirty  cents.  He  therefore  saves  to  this  people  of 
this  country,  on  2,000,000,000  bushels,  the  enormous 
sum  of  $1,400,000,000.  There  is  scarcely  an  industry  in 
existence  to  which  this  argument  does  not  apply  with 
equal  force.  Mr.  Atkinson  virtually  admits  that  railroads 
charge  all  the  traffic  will  bear  when  he  says  :  ' '  The 
charge  which  can  be  put  upon  the  wheat  of  Dakota  or 
Iowa  for  moving  it  to  market  is  fixed  by  the  price  at 
which  East  Indian  wheat  can  be  sold  in  Market  Lane. " 
He  is  opposed  to  the  Interstate  Commerce  Law,  which  he 


250  The  Railroad    Question. 


regards  as  "  obnoxious  measures  of  national  interference 
and  futile  attempts  to  control  this  great  work."  He  would 
rel}'  chiefly  upon  the  puljlicity  of  accounts  made  by  rail- 
way officers,  as  secured  by  the  private  publication  of  Poor's 
Railway  Manual,  for  all  needed  regulation,  but  concedes 
the  establishment  of  a  figurehead  commission,  concluding 
his  remarks  upon  the  subject  as  follows:  ''  A  commission 
which  may  bring  public  opinion  to  bear  upon  railway 
corporations  may  well  be  established,  and  there  the  work 
of  the  legislator  may  well  cease."  When  we  consider  the 
powerful  agencies  employed  by  railroads  to  create  public 
sentiment  in  their  favor  we  can  well  understand  the  ineffi- 
ciency of  such  a  milk-and-water  method  of  control. 

One  of  the  most  radical  books  ever  published  at  the 
instigation  of  railroad  managers  appeared  in  1888,  under 
the  title  "  The  People  and  the  Railways."  Its  author  is 
Appleton  Morgan,  who  attempts  to  ' '  allay  the  animosity 
towards  the  railway  interests"  as  shown  in  Mr.  James  F. 
Hudson's  book,  "  The  Railways  and  the  Republic."  The 
means  which  Mr.  Morgan  chooses  are  not  well  calculated 
to  accomplish  his  purpose,  for  the  masses  of  the  people 
prefer  in  such  a  controversy  arguments  to  ridicule  and 
sarcasm,  weapons  of  literary  warfare  to  which  this  author 
resorts  altogether  too  freely.  Mr.  Morgan's  opinion  as  to 
the  benefits  of  centralized  wealth  and  trade  combinations 
difl^ers  greatly  from  that  held  by  the  great  majoritj'  of  the 
American  people.  He  says:  "The  fact,  the  truth  is, 
that  (however  it  may  be  in  other  countries)  the  accumula- 
tion of  wealth  and  centralization  of  commerce  in  great 
combinations  has  never,  in  the  United  States,  been  a 
source  of  oppression  or  of  poverty  to  the  non -capitalist 
or  wage- worker. "  There  is  scarcely  an  evil  in  railroad 
management  which  Mr.  Morgan  does  not  defend.      Pools, 


Rdilrodd  Literature.  251 

construction  companies,  rebates,  discriminations  and  over- 
capitalization all  find  favor  in  Mr.  Morgan's  e3e.  "Ke- 
bates  and  discriminations,  '  he  says,  j.'  are  neitiier  peculiar 
to  railways  nor  dangerous  to  the  •  llei)ublic. '  They  are  as 
necessary  and  as  harmless  to  the  farmer  as  is  the  chromu 
which  the  seamstress  or  the  shop  girl  gets  with  her 
quarter-pound  of  tea  from  the  small  tea  merchant,  and  no 
more  dangerous  to  the  latter  than  are  the  aforesaid 
chromos  to  the  small  recipients."  Pools  and  combina- 
tions receive  an  unusually  large  share  of  Mr.  Morgan's 
attention.  A  few  selections  from  his  effusions  in  their 
favor  may  be  giA'en  here,  viz. : 

"These  pools  are  the  legitimate  and  necessary  results 
of  the  rechartering  over  and  over  again  of  railway  com- 
panies to  transact  l)usincss  between  the  same  points  by 
paralleling  each  other.  So  long  as  the  people  in  their 
legislatures  will  thus  charter  parallel  lines  serving  identi- 
cal points — tb.us  dividing  territory  they  once  granted 
entire — it  is  not  exactly  clear  how  they  can  complain  if 
the  lines  built  (b}-  money  invested,  if  not  on  the  good  faith 
of  the  people,  at  least  in  reliance  upon  an  undivided  busi- 
ness) combine  to  save  themselves  from  bankruptcy. "  And 
again:  "Against  the  inequality  of  their  own  rates  and 
the  hardship  of  the  long  and  short  haul  (in  other  words, 
against  the  discrimination  of  nature  and  of  physical  laws) 
no  less  than  against  the  peril  of  bankruptcy  and  the  conse- 
quent speculative  tendency  of  their  stocks  (after  which  may 
come  the  wrecking,  the  watering,  and  the  vast  individual 
fortunes),  the  railway's  of  this  republic  have  endeavored, 
by  establishment  of  pool  commissions,  to  defend  both  the 
public  and  themselves.  .  .  .  The  honest  administration  of 
railways  for  all  interests,  the  payment  of  thei;  fixed 
charges,  the  solvency  of  their  securities,  the  faithful  and 


252  TJie  Railroad  Question. 

valuable  performance  of  their  duties  as  carriers,  can  be 
conserved  in  but  one  wny — by  living  tariffs,  such  as  the 
pools  once  guaranteed." 

In  the  following  passage  this  author  denies  to  the  State 
the  right  to  regulate  rates:  "Granting  that  they  [the 
railroads]  must  carr}-  freights  for  the  public  in  such  away 
as  not  to  injure  either  the  public  or  the  freight  in  the 
carrying,  most  emphatically  (it  seems  to  me)  it  does  not 
follow  that  they  must  add  to  the  value  of  the  freights 
they  carry  by  charging  only  such  rates  as  the  public  or 
the  owners  of  the  freight  insist  on. " 

But  Mr.  Morgans  indignation  rises  to  the  highest  pitch 
in  his  discussion  of  the  Interstate  Commerce  Act.  He 
fears  that  it  will  cause  the  downfall  of  our  liberties  and 
sees  in  the  background  the  Venetian  Bridge  of  Sighs  and 
the  French  Bastile.  He  asks:  ""Why  should  for  any 
public  reasons — for  any  reason  of  public  safety — the 
Interstate  Commerce  Law  have  come  to  stay?"  He  then 
berates  the  act  as  follows:  "  To  begin  with,  the  present 
act  abounds  in  punishments  for  and  prohibitions  against 
an  industry  chartered  by  the  people,  but  nowhere  extends 
to  that  industry  a  morsel  of  approval  or  protection.  It 
bristles  with  penalties,  legal,  equitable,  penal,  and  as  for 
contempt,  against  railway  companies,  but  nowhere  alludes 
to  any  possible  case  in  which  a  railway  company  might,  by 
accident,  be  in  the  right,  and  the  patron,  customer,  pas- 
senger or  shipper  in  the  wrong.  .  .  .  The  constitutions  of 
civilized  nations,  for  the  last  few  centuries  at  least,  have 
provided  that  not  even  guilt  should  be  punished  except 
by  due  process  of  law,  and  have  uniformly  refused  to  set 
even  that  due  process  in  motion  except  upon  a  complaint 
of  grievance.  But  the  Interstate  Commerce  Law  denies 
the  one  and  does  away  with  the  necessity  for  the  other. 


Railroad  Literature.  253 

That  statute  provides  that  the  commission  it  creates  shall 
proceed  '  in  such  manner  and  bj'^  such  means  as  it  shall 
deem  proper,'  or  'on  its  own  motion,'  and  that  'no  com- 
plaint shall  at  any  time  be  dismissed  because  of  the  ab- 
sence of  direct  damage  to  the  complainant.'  Even  the 
Venetian  council  often  provided  for  a  certain  and  de- 
scribed hole  in  the  wall  through  which  the  anonymous 
bringers  of  charges  should  thrust  their  accusations.  Even 
the  court  of  star  chamber  was  known  to  dismiss  inquisi- 
tions when  it  found  that  no  wrong  had  been  done.  But 
the  statute  of  interstate  commerce  appears  to  issue  leffres 
de  carhet  against  anything  in  the  shape  of  a  railway  com- 
pany— to  scatter  them  l)roadcast,  and  to  invite  any  one 
who  happens  to  have  leisure  to  fill  them  out,  by  inserting 
the  name  ot  a  railway  company.  It  says  to  the  bystander : 
'  Drop  us  a  postal  card,  or  mention  to  any  of  our  com- 
missioner,!, or  to  a  mutual  friend,  the  name  of  any  railway 
company  of  which  you  may  have  heard,  and  so  give  us 
jurisdiction  to  inquire  if  that  company  ma}'  have  by  chance 
omitted  to  dot  an  i  or  cross  a  t  in  its  ledgers,  or  whether 
any  one  of  its  hundreds  of  thousands  of  agents— in  the 
rush  of  a  day's  business,  or  in  a  shippers  hurry  to  catch 
a  train — may  have  named  a  rate  not  on  the  schedule  then 
being  prepared  at  headquarters,  or  charged  a  sixpence  less 
than  some  other  agent  250  miles  down  the  line  ma}'  have 
accepted  a  week  ago  for  what  might  turn  out  to  be  a  frac- 
tion more  mileage  service  in  the  same  general  direction. 
No  particular  form  is  necessary.  Drop  in  to  luncheon  with 
our  commission  any  day  between  twelve  and  one,  and 
mention  the  name  of  a  railway  company.  Tlie  railway 
company  may  have  done  you  no  damage,  nor  grieved  you 
in  any  way;  just  mention  the  railroad,  and  we  will  take 
jurisdiction  of  its  private  (or  quasi-pul)lic)  affairs.      Or,  if 


254  Tin   Railroad  Qiiesiion. 


you  don't  happen  to  have  time  to  mention  it,  we  will  take 
jurisdiction  anyhow,  '  of  our  own  motion, '  of  any  railway 
company  whose  name  we  find  in  the  Official  Gazette.  It 
really  does  not  matter  which;  any  one  will  do."  This  is 
a  fair  example  of  the  literature  on  the  Interstate  Com- 
merce Law  paid  for  by  railroad  men. 

Mr.  Stickney,  although  a  railroad  president,  takes  an 
entirely  different  view  of  the  situation.  He  considers  the 
law  inadequate  to  bring  about  the  reforms  needed.  He 
says  :  ' '  This  enormous  business  is  now  in  the  control  of 
severaF  hundred  potty  chieftains,  who  are  practically  inde- 
pendent sovereigns,  exercising  functions  and  prerogatives 
in  defiance  of  the  laws,  and  practically  denying  their 
amenability  to  the  laws  of  the  country.  If  the  Govern- 
ment would  seek  to  bring  them  to  terms  and  compel  them 
to  recognize  and  obey  the  laws,  it  must  use  the  means 
necessary  to  accomplish  the  end.  It  must  have  executive 
officers  sufficient  in  number  as  well  as  armed  with  an  ade- 
quate power  and  dignity  to  command  their  respect.  .  .  , 
The  power  conferred  upon  them  [the  Interstate  Com- 
merce Commission]  to  enforce  their  judicial  orders  is  the 
power  '  to  scold. '  The  penalties  of  the  law  which  the 
courts  are  in  power  to  impose  are  certainly  severe,  but  the 
law  has  been  operated  for  about  four  years  without  a,ny 
convictions,  and  yet  no  well-informed  person  is  ignorant 
of  the  fact  that  the  law  has  not  been  obeyed.  The  presi- 
dent of  a  large  S3'stem  is  said  to  have  remarked  that  '  if 
all  who  had  ofi'ended  against  the  law  were  convicted  there 
would  not  be  jails  enough  in  the  United  States  to  hold 
them. '  It  is  evident  that  the  Government  has  not  pro- 
vided adequate  machinery  for  enforcing  the  law." 

Mr.  Stickney  is  correct  in  his  statement  that  adequate 
machinery  for  enforcement  of  the  law  has  not  been  pro- 


Rallrmid  Llterittiirr.  255 


vided,  but  he  does  not  give  sufticient  credit  to  the  hiw  or 
the  commission.  While  much  work  remains  to  be  done, 
much  progress  has  been  made. 

He  is  of  the  opinion  that  the  public  welfare  would  be 
furthered  if  the  National  Government  assumed  the  sole 
control  of  railroads.  He  gives  his  reasons  for  the  change 
w^hich  he  proposes,  as  follows : 

' '  There  are  many  reasons  besides  these  in  the  interest 
of  uniformity  which  make  it  desirable  to  transfer  the 
entire  goutrol  of  this  important  matter  to  the  regulation 
of  the  Nation.  First,  because  of  its  constitution  and 
more  extended  sessions,  Congress  is  able  to  consider  the 
subject  with  greater  deliljeration,  and  therefore  witli  more 
intelligence,  than  can  a  legislature  composed  of  members 
who,  as  a  rule,  hold  their  office  for  but  one  short  session 
of  about  sixty  days'  duration.  There  would  also  be 
removed  from  local  legislation  a  fruitful  source  of  corrup- 
tion, which  is  gradually  sapping  the  foundations  of  public 
morality.  ...  In  the  second  place,  the  problem  of  regu- 
lating railway  tolls  and  rjanaging  railwa3'S  is  essentially 
and  practically  indivisil)ie,  by  State  lines  or  otherwise, 
and  therefore  it  is  not  clear  but  that  whenever  the  ques- 
tion may  come  l)cfore  the  courts  it  may  be  held  that  the 
authority  of  Congress  to  deal  with  interstate  traffic  carries 
with  it,  as  a  necessary  and  inseparable  part  of  the  subject, 
to  regulate  the  traffic  which  is  now  assumed  to  be  con- 
trolled by  the  several  States.  The  courts  have  held  that 
the  States  have  authority  to  regulate  strictly  State  traffic 
in  the  absence  of  Congressional  action,  but  their  decisions 
do  not  preclude  the  doctrine  that  Congress  may  have 
exclusive  jurisdiction  whenever  it  may  choose  to  exercise 
the  authority.  There  is  a  line  of  reasoning  which  would 
lead  to  that  conclusion.  It  may  be  that  many  will  not 
care  to  follow  the  lead  of  the  writer  as  to  the  measure  of 
aggregate  net  revenue  which  railway  companies  are 
entitled  to  collect  in  tolls,  but  it  is  evident  that  before  the 
tolls  can  be  intelligently  determined  some  measure  of  such 
aggregate    revenue    must   be  ascertained.      The  (question 


256  The.  Railroad  Queiitiqri. 

would  then  arise,  what  proportion  must  be  levied  upon 
State  and  interstate  traffic  respectively?  If  the  State 
should  refuse  to  levy  its  share  (and  how  could  siich  share 
be  ascertained?),  then  more  than  its  share  would  have  to 
be  le^ied  on  interstate  traffic,  and  thus  the  State  by 
indirection  would  be  able  to  do  what  the  Constitution 
prohibits.  Of  course,  when  the  Constitution  was  adopted 
railways  and  railway  traffic  were  unknown.  But  it  was  a 
similar  question  which  brought  the  thirteen  original  State? 
together  into  one  nation,  under  the  present  Constitution. 
At  least  the  first  movement  toward  amending  the  original 
Articles  of  Confederation  was  to  give  Congress 'enlarged 
power  over  the  subject  of  commerce.  ' 

In  reply  to  this  it  may  be  said  that  it  will  bo  an  unfor- 
tunate day  for  the  States  when  they  surrender  the  power 
to  control  their  home  afl'airs.  Differences  lietween  State 
and  interstate  rates  could  easil}'  Ije  adjusted  by  the 
National  and  State  commissions  and  b}'  the  courts.  It  cer- 
tainly ought  not  to  be  difficult  for  such  tribunals  to  see 
that  a  rate  which  is  made  higher  or  lower,  as  it  may  be 
for  State  or  interstate  traffic,  is  wrong. 

Mr.  Stickney  has  fallen,  into  the  error  common  to  rail- 
road men  in  believing  that  lower  rates  of  transportation 
will  not  prevail  in  the  future.  There  are  many  reasons 
why  it  is  probable  that  they  will  be  lower.  Present  rates 
are  highly  profitable  on  well  located  lines.  Labor-saving- 
inventions  ^'ill  increase,  and  roads  will  be  built  and  oper- 
ated more  cheaply.  Lines  will  be  located  with  lower 
grades,  lighter  curvature  and  more  directness.  Business 
will  increase  largel}",  and  the  ratio  of  expenses  will  de- 
crease. Steel  will  be  improved  in  quality  and  will  be  sub- 
stituted for  iron.  A  heavier  rail  and  more  permanent 
roadway  will  be  used.  Rates  of  interest  will  rule  lower, 
and  there  will  be  much  more  economy  in  superintending. 
Extravagant  salaries  to  favorites  will  be  reduced,  and  sine- 


Rally  Odd  Lltcrdturc. 


cures  and  parasites  will  be  cut  off  from  the  paj'-rolls. 
Lower  wages  are  inevitable  as  our  population  becomes 
more  dense. 

A  very  interesting  and  instructive  author  upon  railroad 
subjects  is  Charles  Francis  Adams,  Jr. ,  ex-president  of 
the  Union  Pacific  Railroad  and  formerly  a  member  of  the 
Board  of  Railroad  Commissioners  of  the  State  of  Massa- 
chusetts. After  twenty  years'  constant  association  with 
railroad  men,  Mr.  Adams  should  certainly  know  the  char- 
acter of  his  quondam  colleagues.  In  his  liook,  ' '  Rail- 
roads, Their  Origin  and  Problems,"  he  says  of  them: 
' '  Lawlessness  and  violence  among  themselves  [t.  e. ,  the 
various  railroad  sj'stems],  the  continual  effort  of  each 
member  to  protect  itself  and  to  secure  the  advantage  over 
others,  have,  as  they  usually  do,  bred  a  general  spirit  of 
distrust,  bad  faith  and  cunning,  until  railroad  officials 
have  become  hardly  better  than  a  race  of  horse-jock- 
eys on  a  large  scale.  There  are  notable  excep- 
tions to  this  statement,  but,  taken  as  a  whole,  the  tone 
among  them  is  indisputably  low.  There  is  none  of  that 
steady  confidence  in  each  other,  that  easy  good  faith,  that 
esprit  du  corps,  upon  which  alone  system  and  order  can 
rest.  On  the  contrary,  the  leading  idea  in  the  mind  of 
the  active  railroad  agent  is  that  some  one  is  always  cheat- 
ing him,  or  that  he  is  never  getting  his  share  in  some- 
thing. If  he  enters  into  an  agreement,  his  life  is  passed 
in  watching  the  other  parties  to  it,  lest  by  some  cunning 
device  they  keep  it  in  form  and  break  it  in  spirit.  Peace 
is  with  him  always  a  condition  of  semi-warfare,  while 
honor  for  its  own  sake  and  good  faith  apart  from  self- 
interest  are,  in  a  business  point  of  view,  symptoms  of 
youth  and  a  defective  education."  And  again,  in  an 
address  delivered  before  the  Commercial  Club  of  Boston  in 


258  Thr  n<uhoa,l  Question. 

December,  1888,  Mr.  Adams  expressed  his  opinion  con- 
cerning the  average  raih'oad  manager  of  to-daj'  as  follows  : 
' '  That  the  general  railroad  situation  of  the  country  is  at 
present  unsatisfactory  is  apparent.  Stockholders  are  com- 
plaining; directors  are  bewildered;  bankers  are  fright- 
ened. Yet  that  the  Interstate  Commerce  Act  is  in  the 
main  responsible  for  all  these  results,  remains  to  be  proved. 
In  my  opinion,  the  difficulty  is  far  more  deep-seated  and 
radical.  In  plain  words,  it  does  not  lie  in  any  act  of  leg- 
islation, State  or  National ;  and  it  does  lie  in  the  covet- 
ousness,  want  of  good  faith  and  low  moral  tone  of  those 
in  whose  hands  the  management  of  the  railroad  system 
now  is;  in  a  word,  in  the  absence  among  men  of  any  high 
standard  of  commercial  honor.  These  are  strong  words, 
and  3'et,  as  the  result  of  a  personal  experience  stretching 
over  nearly  twenty  years,  I  make  bold  to  say  they  are  not 
so  strong  as  the  occasion  would  justify.  The  railroad 
system  of  this  country,  especially  of  the  regions  west  of 
Chicago,  is  to-day  managed  on  principles  which — unless  a 
change  of  heart  occurs,  and  that  soon — must  inevitably 
lead  to  financial  disaster  of  the  most  serious  kind.  There 
is  among  the  lines  composing  that  system  an  utter  disre- 
gard of  those  fundamental  ideas  of  truth,  fair  play  and 
fair  dealing  which  lies  at  the  foundation,  not  onl}'  of  the 
Christian  faith,  but  of  civilization  itself.  With  them 
there  is  but  one  rule — that,  many  years  ago,  put  by 
Wordsworth  into  the  mouth  of  Rob  Roy: 

"  '  The  simple  rule,  the  good  old  plan, 
That  lie  shall  take  who  has  the  power, 
And  he  shall  keep  who  can.  "  " 
As  regards  the  causes  of  the  Granger  movement,  Mr. 
Adams  says,  in  the  work  above  mentioned :   ' '  That  it  [the 
Granger   episode]    did    not   originate   without  cause  has 


Rail  road  LU(  rdhirc .  259 


already  beeu  pointed  out.  It  is  quite  safe  to  go  further, 
and  to  say  that  the  movement  was  a  necessary  one,  and 
through  its  results  has  made  a  solution  of  the  i-ailroad 
problem  possible  in.  this  country.  At  the  time  that  move- 
ment took  shape  the  railroad  corporations  were  in  fact 
rapidly  assuming  a  position  which  could  not  be  tolerated. 
Corporations,  owning  and  operating  the  highways  of  com- 
merce, claimed  for  themselves  a  species  of  immunity  from 
the  control  of  the  law-making  power.  When  laws  were 
passed  with  a  view  to  their  regulation  they  received  them 
in  a  way  which  was  at  once  arrogant  and  singularly  inju- 
dicious. The  officers  entrusted  with  the  execution  of 
those  laws  they  contemptuously  ignored.  Sheltering 
themselves  behind  the  Dartmouth  College  decision,  they 
practically  undertook  to  set  even  public  opinion  at  defi- 
ance. Indeed,  there  can  be  no  doubt  that  those  repre- 
senting these  corporations  had  at  this  juncture  not  only 
become  fully  educated  up  to  the  idea  that  the  gross 
inequalities  and  ruinous  discriminations  to  which  in  their 
business  they  were  accustomed  were  necessary  incidents 
to  it  which  afforded  no  just  ground  of  complaint  to  any 
one,  but  they  also  thought  that  any  attempt  to  rectify 
them  was  a  gross  outrage  on  the  elementary  principles 
both  of  common  sense  and  of  constitutional  law.  In  other 
words,  they  had  thoroughly  got  it  into  their  heads  that  they, 
as  common  carriers,  were  in  no  way  bound  to  afford  equal 
facilities  to  all,  and,  indeed,  that  it  was  in  the  last  degree 
absurd  and  unreasonable  to  expect  them  to  do  so.  The 
Granger  method  was  probably  as  good  a  method  of 
approaching  men  in  this  frame  of  mind  as  could  have  been 
devised. " 

Speaking  of  the  educational  value  of  railroad  competi- 
tion, Mr.  Adams  says :    ' '  Undoubtedly  the  fierce  struggles 


260  The  Railroad  Qurfitirn). 

between  rival  corporations  whicli  marked  the  history  of  rail- 
road development,  both  here  and  in  England,  were  very 
prominent  factors  in  the  work  of  forcing  the  systems  of 
the  two  countries  up  to  their  present  degree  of  efficiency. 
Kailroad  competition  has  been  a  great  educator  for  railroad 
men.  It  has  not  only  taught  them  how  much  they  could 
do,  but  also  how  very  cheaply  they  could  do  it.  Under 
the  strong  stimulus  of  rivalry  thej'  have  done  not  only 
what  they  declared  were  impossibilities,  but  what  they 
really  believed  to  be  such. " 

Mr.  Adams  has,  from  his  long  association  with  railroad 
managers,  imbibed  one  heresy  which  is  in  strange  discord 
with  the  general  soundness  of  his  opinions.  He  holds 
that  the  railroad  system  was  left  to  develop  upon  a  false 
basis,  inasmuch  as  the  American  people  relied  for  protect- 
ing the  community  from  abuses  upon  general  laws  author- 
izing the  freest  possible  railroad  construction  everywhere 
and  by  any  one.  It  can  therefore  not  be  surprising  that 
Mr.  Adams  is  an  advocate  of  the  legalized  pool.  He  is 
of  the  opinion  that  secret  combinations  among  railroads, 
inasmuch  as  they  always  have  existed,  always  will  exist 
as  long  as  the  railroad  system  continues  as  it  now  is. 
Hence  he  proposes  to  legalize  a  practice  which  the  law 
cannot  prevent,  and  by  so  doing  to  enable  the  railroads  to 
confederate  themselves  in  a  manner  which  shall  be  at  once 
both  public  and  responsible.  The  reply  might  be  made 
that  there  are  many  other  conspiracies  which  the  law  can- 
not alwaj's  prevent,  but  that  this  is  no  reason  whj^  conspir- 
acies should  lie  legalized.  If  pools  and  other  railroad 
abuses  had,  since  the  beginning  of  the  railroad  era,  been 
treated  ^s  crimes  and  misdemeanors,  and  punished  as  such 
by  the  imposition  of  heavy  fines,  few  people  would  to-day 
be  ready  to  offer  apologies  for  them.   If  the  time  shall  ever 


Railroad  Literature.  261 


come  when  pools  must  be  legalized  it  will  be  time  for  rail- 
road control  equivalent  to  Government  ownership. 

Among  the  more  recent  writers  upon  railroad  subjects 
is  W.  D.  Dabnc}',  late  chairman  of  the  Committee  on 
Eailwa3s  and  Internal  Navigation  in  the  Legislature  of 
Virginia.  Mr.  Dabney  favors  State  control,  and  is,  on 
the  whole,  friendl}'  to  the  Interstate  Commerce  Act.  He 
sees  danger  in  the  pool,  but  inclines  to  the  belief  that  the 
public  benefit  derived  from  the  pooling  system  outweighs 
the  danger  of  public  detriment  from  its  existence.  The 
following  is  his  chief  argument  for  a  legalized  pool :  "Per- 
haps, so  long  as  railroad  companies  continue  to  enjoy  an 
absolute  monopoly  of  transportation  over  their  own  lines, 
so  that  free  competition  is  restricted  in  its  operation  to  a 
comparatively  few  favored  points,  it  may  be  worthy  of 
serious  consideration  whether  it  would  not  be  better  to 
legalize  than  to  prohibit  pooling,  taking  care  to  put  the 
whole  matter  under  strict  public  supervision  and  control. 
The  companies  would  then  be  left  comparatively  free  to 
bring  their  local  rates  into  something  like  harmony  with 
the  long-distance  rates,  and  should  they  fail  to  do  so 
where  the  needs  of  the  local  community  and  their  revenues 
make  it  proper  to  be  done,  then  it  is  the  function  of  public 
regulation  to  compel  it  to  be  done." 

Of  the  Interstate  Commerce  Act  Mr.  Dabney  says: 
"  The  legislation  recently  enacted  by  Congress  for  the 
regulation  of  commerce  by  railway  is  the  result  of  more 
careful  and  intelligent  deliberation  perhaps  than  any  other 
measure  of  similar  character,  and  it  is  not  unlikely  that 
the  legislation  of  many  of  the  States  will  sooner  or  later 
be  conformed  to  it." 

He  speaks  at  some  length  of  the  drift  toward  railroad 
centralization,      A  few  extracts  from  this  passage  may  be 


262  The  Railroad   Question. 

here  given :  ' '  That  the  tendency  towards  the  unification 
and  consolidation  of  different  and  competitive  lines  has  been 
decidedly  increased  by  the  anti-pooling  and  the  long  and 
short  haul  sectjons  of  the  Interstate  Commerce  Law  can 
hardly  be  doubted.  .  .  .  The  modern  device  of  the  'trust' 
as  a  means  of  unifying  industrial  interests  and  eliminating 
competition  had  not  yet  been  applied  in  the  field  of  rail- 
road transportation.  .  .  .  The  scheme  of  trust  here  briefly 
outlined  would  probably  require  for  its  successful  opera- 
tion the  concurrence  of  the  entire  stockholding  interest  of 
each  company  embraced  in  it;  and  herein,  it  seems  likely, 
will  be  found  the  chief  difficulty  in  perfecting  such  a 
scheme.  Should  it  ever  be  perfected,  a  far  more  stringent 
public  supervision  and  control  of  the  railroad  transporta- 
tion of  the  country'  will  be  demanded. " 

Another  author,  Charles  Whitney  Baker,  associate 
editor  of  the  Engineering  Neios,  suggests  in  his  book, 
"  Monopolies  and  the  People,"  a  plan  for  the  reorganiza- 
tion of  our  railroad  system,  to  remedy  the  evils  of  mon- 
opoly which  are  at  present  connected  with  railroad 
management.  The  following  quotation  from  his  work 
outlines  the  s^-stem  proposed  :  "  Let  the  Government  ac- 
quire the  title  of  the  franchise,  permanent  way  and  real 
estate  of  all  the  railway  lines  in  the  countr}^  Let  a  few 
corporations  be  organized  under  Government  auspices, 
and  let  each,  by  the  terms  of  its  charter,  receive  a  per- 
petual lease  of  all  the  railway  lines  built,  or  to  be  built, 
within  a  given  territory.  Let  the  territory  of  each  of 
these  corporations  be  so  large,  and  so  planned  with  regard 
to  its  neighbors,  that  there  shall  be,  so  far  as  possible,  no 
competition  between  them.  For  instance,  one  corporation 
would  operate  all  the  lines  south  of  the  Ohio  and  east  of 
the  Mississippi  River;  another  all  lines  east  of  the  Hudson 


Railroad  Literature .  ~  263 


and  of  Lake  Champlain,  etc.  Let  the  terms  of  rental  of 
these  lines  be  about  Sj  per  cent,  on  the  road's  actual 
'  present  cost'  (the  sum  of  money  it  would  cost  to  rebuild 
it  entirely  at  present  prices  of  material  and  labor),  less  a 
due  allowance  for  depreciation.  The  corporations  would 
be  obliged  to  keep  the  property  in  as  good  condition  as 
when  received,  and  would  own  absolutely  all  their  rolling- 
stock,  machinery,  etc."'  The  proposed  reform  measures, 
it  must  be  admitted,  are  very  good  in  theory,  but  their 
practical  application  is  unfortunately  entirely  out  of  the 
question  under  our  system  of  government. 

Mr.  John  jNL  Bonham  is  the  author  of  a  recent  work 
entitled  "  Railw^ay  Secrecy  and  Trusts."  This  writer, 
upon  the  whole,  takes  advanced  ground  in  dealing  with 
the  question  of  railroad  reform.  He  deems  the  present 
interstate  legislation  inadequate  _  to  correct  all  the  graver 
railroad  evils,  expressing  his  views  upon  this  subject  as 
follows: 

' '  Kailway  construction  continues  to  increase  in  the 
United  States  with  immense  rapidity.  Concun-ent  with 
this  increase,  and  notwithstanding  all  the  efforts  that  have 
been  made  at  restraint,  the  aggressions  upon  political  and 
industrial  rights  increase  also.  Nor  is  it  likely  that  with- 
out more  rigorous  control  than  is  now  exercised  these 
aggressions  will  be  any  less  active  than  they  are  to-day. 
It  is  coming  to  be  pretty  generally  realized  that  the  Inter- 
state Commerce  legislation  has  not  fulfilled  the  expecta- 
tion of  its  friends.  But  this  is  a  frequent  trait  of  tenta- 
tive legislation.  It  is  not  reasonable  to  expect  that  the 
first  efforts  to  solve  a  problem  the  factors  of  which  are  so 
hidden  and  complex  will  be  followed  by  complete  success. " 

Concerning  the  changes  needed  to  make  Government 
regulation  in  the  United  States  more  effective,  he  says: 

"  A  reform  which  would  deal  with  an  elaborate  system 
of  evil  cannoj,  therefore,   be  confined   to   treating  conse- 


264  The  Railrodd  Question. 

quences,  the  separate  instances  of  the  system.  There 
must  be  a  power  which  can  go  behind  these  and  grapple 
with  causes.  There  must,  therefore,  be  something  more 
tlian  a  court.  There  must  be  a  commission,  a  depart- 
ment of  government  which  will  provide  organized  super- 
vision and  inspection  against  whicli  tlie  quasi-public  cor- 
poration can  claim  no  privacy  as  inviolable.  Such  a  de- 
partment must  be  clothed  with  the  power  to  ascertain 
precisely  where  and  how  the  evils  of  the  present  methods 
originate,  and  when  these  are  ascertained  it  must  be  able 
to  apply  the  remedy  at  the  source  of  evil.  The  remedial 
force  must  be  of  a  preventive  kind." 

A  few  grave  misstatements  of  historical  facts  greatly 
mar  Mr.  Bonham's  book.  He  makes,  for  instance,  the 
following  statement: 

"  Following  this  came  restrictive  legislation,  which,  in 
some  instances,  was  so  unreasonable  as  to  make  any  rail- 
way management  impossible.  Some  of  the  Granger  leg- 
islation, and  especially  that  of  Iowa,  was  of  this  char- 
acter, as  were  also  some  of  the  earlier  efforts  to  secure 
Congressional  legislation." 

It  was  left  to  Mr.  Bonham  to  discover  that  legislation 
ever  made  railroad  management  impossible  in  Iowa.  The 
General  Assembly  of  Iowa  passed  at  two  diflferent  times 
railroad  laws  that  were  greatly  obnoxious  to  railroad  man- 
agers. In  1874  it  passed  a  maximum  tariff  act  which, 
at  the  urgent  solicitation  of  the  railroad  forces,  •  was  re- 
pealed four  years  later;  and  in  1888  it  passed  an  act  con- 
taining the  principles  of  the  Interstate  Commerce  Act  and 
in  addition  authorizing  the  Board  of  Eailroad  Commission- 
ers to  fix  prinut  facie  rates.  Strange  as  it  may  seem  to 
Mr.  Bonham  and  other  people  inclined  to  believe  without 
investigation  the  statements  of  railroad  men,  the  earnings 
of  the  Iowa  roads  greatly  increased  immediately  after  the 
enactment  of  the  so-called  Granger  laws  in  1874,  as  the 
following  table  will  show":  * 


Railroad  Literature.  265 

Year.  Miles  of  Railroad.  Gross  Receipts. 

1871 3,850 $12,395,826 

1872 3,643 14,534,408 

1873 3,728 15,430,619 

1874 3,765 15,568,907 

1875 3,823 18,422.587 

1876 3,938 17,221,033 

1877 4,075 20,714,496 

1878  4,157  21,294,275     , 

When  the  Granger  law  was  repealed  in  1878,  the  rail- 
roads were  earning  $1,000  per  mile  more  than  they  were 
earning  when  the  law  was  enacted.  The  present  railroad 
law,  which  was  passed  in  1888,  and  has  also  been  the 
subject  of  extreme  criticism  on  the  part  of  railroad  organs, 
has  had  the  same  beneficial  effect.  The  law,  owing  to  the 
obstacles  thrown  in  its  way  b}"  the  railroad  managers,  did 
not  become  operative  until  1889.  From  July  1st,  1889, 
to  June  30th,  1892,  the  gross  railroad  earnings  of  the 
Iowa  roads,  which  for  three  3^ears  had  been  at  a  stand- 
still, increased  and  were  over  $7,000,000  more  in  1892 
than  they  had  been  any  year  previous  to  1889,  as  will  be 
seen  from  the  table  below: 

Gross  Railroad  Earnings  in  Iowa. 

1886-87 $37. 539,730 

1887-88 37,295,586 

1888-89 37,469,276 

1889-90 41,318,133 

1890-91 43,102,399  ^ 

1891-93 44,540,000 

The  net  earnings  per  mile  of  the  Iowa  roads  were 
$1,421.91  in  the  year  1888-89,  and  $1,821.37  the  year 
following.  The  total  net  earnings  of  all  Iowa  roads  dur- 
ing the  year  ending  Juijo  30th,  1891,  were  $14,463,106, 
against  $11,861,310  during  the  year  ending  June  30th, 
1889,  and  were  still  greater  for  the  year  ending  June  30, 


266  The   Railroad    Question. 

1892.  No  further  vindicatiou  of  the  Iowa  h\w  is  neces- 
sary'. These  figures  show  plainly  that  the  lowering  and 
equalizing  of  the  rates  not  only  increased  the  roads'  busi- 
ness and  income,  but  also  their  net  earnings.  And  it 
must  be  remembered  that  the  reports  showing  these  facts 
were  made  by  the  railroad  companies  and  were  certainly 
not  made  with  any  intention  of  prejudicing  the  cause  of 
the  railroad  manager. 

James  F.  Hudson,  the  author  of  ' '  The  Railways  and 
the  Republic,"  is  a  very  exhaustive  and  instructive  writer 
upon  the  subject  of  railroad  abuses.  His  material  is  well 
selected,  and  the  subject  ably  presented.  To  the  assertion 
of  railroad  managers,  that  railroad  regulation  injuriously 
affects  the  value  of  railroad  property,  he  makes  the  follow- 
ing reply: 

"  Suppose  that  it  were  true,  as  these  jurists  and  writers 
claim,  that  by  the  assertion  of  the  public  right  to  regulate 
the  railwa)'s  the  value  of  their  propert}^  is  decreased,  are 
there  no  other  property  rights  invoh^ed?  Do  railway 
investments  form  tlie  only  property  in  the  land  which  re- 
quires the  protection  (jf  the  law?  Are  we  to  understand 
these  judgments  and  their  iudorsei's  to  mean  that  because 
railroad  property  will  depreciate  if  certain  principles  of 
justice  prevail,  therefore  justice  is  to  be  set  aside  for  the 
benefit  of  railway  property?  If  the  magnitude  of  interests 
involved  is  to  be  of  weight  in  deciding  such  questions,  let 
us  put  against  '  the  hundreds  of  millions '  of  railway 
property  on  the  one  side  the  thousands  of  millions  of 
private  property  on  the  other.  Railway  regulation, 
according  to  a  writer  in  the  I*rtnccton  Revieio,  is  'confis- 
cation of  railroad  property.'  but  this  puts  wholly  out  of 
the  question  the  idea  of  private  proi)erty  which  ie 
rendered  possiple  by  leaving  unchecked  the  power  of  the 
railways  over  commerce  and  uaanufactures  through  the 
manipulation  of  freight  rates.  Of  the  two  parties  in  in- 
terest tiie  shippers  represent  far  greater  property  interests 
than  the  carriers,  although  the  latter,    by  their  orgauiza 


R(ii/ru<nl  Litcrafurr.  li(57 


tiou,  are  more  powerful.  I  have  yet  to  hear  of  a  single 
case  where  restrictive  railway  legislation  has  seriousl}^ 
damaged  the  honest  valuation  of  any  railway.  I  have  yet 
to  learn  of  any  seriously  proposed  scheme  of  regulation 
that  has  proposed  to  cut  down  railway  profits  below  a  fair 
dividend  on  capital  actually  invested.  But  the  entire 
Nation  knows  of  one  notorious  case  in  which  the  discrim- 
inating policy  of  the  leading  railways  of  the  country  has 
resulted  in  the  wholesale  confiscation  of  private  property 
for  the  benefit  of  a  favored  corporation." 

Concerning  the  inconsistency  presented  by  the  plea  of 
railroad  managers  for  a  legalized  pool,  Mr.  Hudson  says: 

"It  has  been  argued  for  years  that  the  subject  is  so 
delicate  and  vast  that  it  must  not  be  touched  by  legisla- 
tion in  the  public  interest.  To  protect  the  rights  of  the 
ordinary  shipper  against  the  favorite  of  the  railway  would 
so  hamper  the  operations  of  trade,  it  has  been  repeated 
times  without  number,  as  to  take  away  the  independ- 
ence of  the  railways  and  destro}'  the  freedom  of  competi- 
tion. Yet,  after  years  of  argument  that  Government  has 
no  constitutional  power  to  interfere  with  the  railways,  and 
of  demonstration  that  all  such  interference  must  be  ill- 
advised  and  injurious,  the  railway  logic  comes  to  the  sur- 
prising climax  of  appealing  to  legislation  for  the  aid  of 
the  law  in  upholding  their  efforts  to  prevent  competition." 

Mr.  Hudson  maintains  that  if  the  pool  were  legalized 
it  would  only  be  a  means  of  swelling  railroad  earnings. 
He  sajs: 

"If  the  pool  would  maintain  equitable  rates  its  success 
might  be  desired,  but  what  guarantee  is  there  that  the 
complete  establishment  of  its  power  would  make  such 
rates?  Its  very  character,  the  functions  of  the  men  who 
control  its  policy,  and  its  avowed  object  of  swelling  the 
earnings  of  railways  by  artificial  methods,  forbid  such  an 
expectation.  3Iake  the  success  of  the  pool  absolute,  so 
that  it  can  work  without  fear  of  competition,  and  its 
rates  will  be  uniform,  l)ut  of  such  a  character  that  their 
uniformity  will  he  a  public   grievance  and   burden.    ,  ,   . 


268  The  Railroad    Quest  ion. 

A  grave  effect  of  this  policy,  though  not  easily  cal- 
culable, is  the  ability  it  gives  to  railway  officials  to 
control  the  prices  of  stocks,  and  the  temptation  to  en- 
hance their  fortunes  by  so  doing.  .  .  It  is  a  heavy  indict- 
ment against  the  pooling  system  that  it  gives  power  to 
avaricious  and  unscrupulous  men  in  railway  management 
to  enrich  themselves  at  the  cost  of  shareholders  and 
investors,  both  by  forming  combinations  and  by  exciting 
disputes  or  ruptures  in  them. " 

The  question  whether  the  common  law  does  not  pro- 
tect the  public  sufficiently  is  well  answered  by  Mr.  Hud- 
son as  follows: 

"The  common  law  is  sufficient  in  theory,  but  it  has 
failed  in  practice.  .  .  .In  practice,  legal  remedies  against 
railway  injustice  can  be  applied  to  the  courts  only  by 
fighting  the  railways  at  such  disadvantages  that  the  ordi- 
nary business  man  will  never  undertake  it  except  in  des- 
perate cases.  Every  advantage  of  strength  and  position 
is  with  the  railways.  .  .  .  This  [the  railroad]  power  has 
kept  courts  in  its  puj;  it  defies  the  principles  of  com- 
mon law  and  nullifies  the  constitutional  pro\isions  of  a 
dozen  States;  it  has  many  representatives  in  Congress 
and  unnumbered  seats  in  the  State  legislatures.  No 
ordinary  body  of  men  can  permanently  resist  it." 

But  the  remedy  which  Mr.  Hudson  proposes  for  the 
correction  of  railroad  evils  is  one  of  doubtful  efficacy.  It 
is  this: 

' '  Legislation  should  restore  the  character  of  public 
highways  to  the  railwa3's  by  securing  to  all  persons  the 
right  to  run  trains  over  their  track  under  proper  regula- 
tions, and  by  defining  the  distinction  between  the  pro- 
prietorship and  maintenance  of  the  railway  and  the  busi- 
ness of  common  carriers. " 

While  it  is  admitted  that  the  opening  of  the  railroads 
to  the  free  use  of  competing  carriers  is  not  necessarily 
impractical  from  a  technical  point  of  view,  it  cannot  be 
admitted  that  the  proposed  remedy  would  cure   the  evil. 


Railroad  Literature.  269 


There  would  certainly  be  nothing  to  hinder  carrying  com- 
panies forming  a  trust  which  might  prove  more  danger- 
ous to  tlie  interests  of  shippers  than  are  to-day  tlie  com- 
binations of  the  railroad  companies. 

Mr.  Hudson  devotes  a  chapter  to  the  railroad  power  in 
politics,  and  shows  how  corporations,  through  their  wealth, 
have  secured  the  greatest  and  most  responsible  offices  in 
the  executive,  legislative  and  judiciary  departments  of  the 
Government.  Speaking  of  their  influence  in  the  Supreme 
Court  of  the  United  States,  he  says : 

"The  assertion  that  Jay  Gould  paid  $100,000  to  the 
Republican  campaign  fund  in  1880,  in  return  for  which 
Judge  Stanley  Mathews  was  nominated  to  the  Supreme 
Bench,  is  denied  as  a  political  slander;  but  the  fact  re- 
mains that  this  brilliant  advocate  of  the  railway  theories 
of  law  has  been  placed  in  the  high  tribunal,  and  that*  his 
presence  there  together  with  Justice  Field,  long  a  judicial 
advocate  of  the  corporations,  is  expected  to  protect  the 
railways  in  future  against  such  constructions  of  law  as  the 
Granger  decisions." 

An  English  writer,  Mr.  J.  S.  Jeans,  presents,  in  his 
"  Railwa}' Problems, "  a  great  deal  that  is  of  interest  to 
American  readers.  The  statistical  data  of  his  work  are 
especially  interesting.  We  learn  that  the  United  King- 
dom has  nearly  twenty  railroad  employes  per  mile  of  road 
operated,  to  less  than  five  in  the  United  States,  and  that 
the  average  number  of  employes  per  £1,000  ($4,850)  of 
gross  earnings  is  on  the  railroads  of  the  United  Kingdom 
5.4  to  only  about  half  as  many  in  the  United  States.  We 
further  learn  that  the  average  earnings  per  train  mile  in 
America  are  over  25  per  cent,  higher  than  they  are  in  the 
United  Kingdom,  and  exceed  those  of  most  European 
countries. 

Of  the  remarkable  increase  in  number  and  the  profit- 


270  The  Railroad  Question. 

ableness   of  the  third-class  passenger  traffic  in  England 
Mr.  Jeans  says: 

'•  There  has  hitherto  been  a  great  lack  of  knowledge  in 
this  country  as  to  the  extent  to  which  the  different  classes 
of  passenger  traffic  yield  adequate  profit  to  the  railroad 
companies.  English  passenger  traffic  differs  from  that 
of  most  other  countries  in  this  respect,  that  the  chief 
companies  attach  third-class  carriages  to  almost  every 
train.  The  accommodation  provided  for  third-class  pas- 
sengers in  England  is  also  much  superior  to  what  is  found 
in  other  countries  where  there  is  the  same  distinction  of 
classes.  The  effect  of  those  two  distinguishing  features 
of  the  English  railway  system  is  that  third-class  carriages 
are  much  more  and  first-class  carriages  much  less  utilized 
than  in  other  countries.  The  tendency  appears  to  be  to- 
wards an  increasing  use  of  third-class,  and  a  decreasing 
use  of  first-class  vehicles.  But,  all  the  same,  the  leading 
English  lines  continue  to  provide  a  large  proportion  of 
first-class  accommodation  in  every  train,  and  it  is  no  un- 
usual thing  to  find  the  third-class  carriages  of  express 
trains  absolutely  full,  while  first-class  carriages  are  almost 
empty.  The  natural  result  is  that  third-class  travel  is  a 
source  of  profit,  while  first-class  travel  is  not.  ...  So  far 
as  passenger  traffic  is  a  source  of  net  profit,  that  profit  is 
contributed  by  the  third-class.  The  total  receipts  from 
passenger  traffic  in  England  and  Wales  amounted  in  1885 
to  £21,968,000.  But  if  the  average  receipts  per  carriage 
over  the  whole  had  been  the  same  as  in  the  case  of  the 
Midland  first-class  vehicles,  namely,  £330,  the  total  re- 
ceipts from  passenger  traffiib  would  only  have  been  about 
nine  millions.  It  is  not  necessary  to  be  an  expert  in  order 
to  see  that  traffic  so  conducted  must  be  attended  with  a 
very  serious  loss." 

Of  the  stock -watering  of  American  railroad  companies 
Mr.  Jeans  says: 

"It  seldom  happens  that  in  the  United  States  the  cost 
of  a  railwa}'  and  its  equivalent  corresponds,  as  it  ought  to, 
to  the  total  capital  expenditure.  There  is  no  country 
in  the  world  where  the  business  of  watering    stocks  is 


Rail  road  Literature.  271 

better  understood  or  carried  out  more  systematically 
and  on  so  large  a  scale.  For  this  reason  there  is  liable  to 
be  a  great  deal  of  error. entertained  in  reference  to  the 
natural  cost  of  American  lines.  " 

There  are  many  financial  journals  that  are  so  closely 
identified  with  the  speculative  interests  of  the  country, 
and  many  railway  papers  that  depend  so  largely'  upon  rail- 
wa}'  men  for  support,  that  railway  managers  are  never 
without  a  medium  through  which  they  can  present  their 
views  to  the  public.  A  systematic  and  concerted  effort  is 
also  constantly  made  by  the  railroads  to  pervert  the  press 
of  the  countr}'  at  large.  The  great  city  papers  generally 
yield  to  their  influences  and  enlist  in  their  service,  and 
yet  there  are  notable  exceptions  to  this. 

In  speaking  of  the  extravagant  sums  which  the  rail- 
roads paid  to  the  great  dailies,  ostensibly  for  advertising, 
but  in  fact  for  their  good  will  and  other  ser\'ices,  a  rail- 
road superintendent  recently  said  that  it  was  an  infamous 
outrage,  and  3^et  it  was  the  best  investment  of  money  that 
his  company  could  make.  The  country  papers  have 
shown  more  integrity  in  maintaining  their  independence, 
but  the  railroads  are  not  without  their  organs  among 
them.  It  is  not  unfrequent  to  find  some  of  them  defend- 
ing railroad  abuses  with  all  the  apparent  zeal  of  a  Wall 
Street  organ,  and  a  glance  at  their  columns  often  reminds 
one  of  Mr.  Lincoln's  story  of  the  Irishman  and  the  pig. 
Mr.  Lincoln  defended  an  Irishman  against  the  charge  of 
stealing  a  pig.  After  the  testimony  was  taken  in  court,  Mr. 
Lincoln  called  his  client  aside  and  told  him  that  the  testi- 
mony was  so  strong  against  him,  and  that  the  case  was  so 
clear,  that  it  was  impossible  for  him  to  escape  conviction, 
a-nd  he  advised  him  to  plead  guilty  and  throw  himself  on 
the  mercy  of  the  court.  "No,  Mr.  Lincoln,"  said  Pat- 
rick, ' '  you  go  back  and  make  one  of  your  great  speeches 


272  TJie  Railroad   Qttesiwii. 

and  swing  your  long  arms  and  talk  loud  to  the  jury,  and 
you  will  win  the  case."  Mr.  Lincoln,  in  accordance  with 
that  disposition  to  accommodate  so  strongly  characteristic 
of  him,  did  as  he  was  directed  by  his  client,  and  to  his 
great  surprise  the  jury  promptly  brought  in  a  verdict  of 
not  guilty.  After  it  was  all  over,  Mr.  Lincoln  said:  "Now, 
Patrick,  tell  me  why  that  jury  acquitted  you.  I  know  that 
3'ou  stole  the  pig,  and  my  speech  had  nothing  to  do  in 
securing  your  acquittal. "  Patrick  replied:  "And  sure, 
Mr.  Lincoln,  every  one  of  those  jurymen  ate  a  piece  of 
the  pig." 


CHAPTER  X. 

RAILROAD  LITERATURE CONTINUED. 

RAILROAD  questions  have  become  of  such  general 
interest  that  their  discussion  has  become  a  promi- 
nent factor  of  magazine  literature.  It  is  a  significant  fact 
that  these  contributors  are  usually  railroad  men,  and 
under  these  circumstances  an  unbiased  discussion  of  the 
questions  at  issue  is  indeed  a  rare  occurrence.  It  is  but 
too  frequently  the  sole  object  of  the  contributor,  and  not 
unfrequently  even  of  the  publisher,  to  create  a  public 
sentiment  in  favor  of  the  unjust  demands  of  railroad 
managers. 

During  the  last  few  years  systematic  efforts  have  been 
made  hj  the  railroad  interests  to  influence  public  opinion 
against  the  Interstate  Commerce  Law  and  restrictive  State 
legislation  through  the  leading  magazines  of  the  country. 
Mr.  Sidney  Dillon,  pi'esident  of  the  Union  Pacific  Railroad, 
in  an  article  which  appeared  in  the  April  (1891)  number 
of  the  N^orth  American  Review,  under  the  title  "The 
West  and  the  Railroads,"  endeavors  to  show  that  the 
West  is  indebted  to  the  railroad  managers  for  nearly  all 
of  the  blessings  which  its  people  enjoy,  and  that  there- 
fore railroad  legislation  in  the  West  is  a  symptom  of  rank 
ingratitude.  He  prefaces  his  argument  with  the  remark 
that  the  elder  portions  of  our  commonwealth  have  already 
forgotten,  and  the  3'ounger  portions  do  not  comprehend 
or  appreciate,  that  but  for  the  railroads  what  w^e  now  style 
the  Great  W^est  would  be,  except  in  the  valley  of  the 
Mississippi,    an  unknown   and   unproductive  wilderness. 

873 


274  T]ir   RailrodiJ    Qucatlon. 

He  then  argues  that,  inasmuch  as  the  railroads  carry  the 
wheat  of  Dakota  and  Minnesota  to  the  sea-coast,  and 
bring  those  sections  of  our  community  into  direct  rehition 
with  hungry  and  opulent  Liverpool,  the  world  should 
' '  thank  the  railway  for  the  opportunitj'  to  buy  wheat, 
but  none  the  less  should  the  West  thank  the  railway  for 
the  opportunity  to  sell  wheat. "  It  does  not  seem  to  occur 
to  Mr.  Dillon  that  the  railway  might,  with  equal  pro- 
priety, thank  the  world  in  general,  and  the  Great  ^\  est 
in  particular,  for  its  opportunity  to  carry  wheat. 

We  are  also  told  that  the  railway  has  reclaimed  from 
nature  immense  tracts  of  land  that  were  worthless  except 
as  to  their  possibilities,  which  once  seemed  too  vague  and 
remote  to  be  considered  and  are  to-da}^  valuable ;  that  it  has 
changed  the  character  of  the  soil  as  well  as  the  climate  of 
the  West,  and  we  are  almost  given  to  understand  that  in 
many  respects  it  has  assumed  the  functions  of  Provi- 
dence. Mr.  Dillon  generously  admits,  however,  that  rail- 
ways have  not  been  built  from  philanthropic  motives  and 
that  we  find  among  railroad  promoters  and  contractors 
men  of  large  fortunes.  He  then  proceeds  to  reprimand 
the  States  west  of  the  Mississippi  for  their  "  ungrateful" 
legislation,  which,  he  says,  interferes  with  the  business  of 
the  railway,  even  to  the  minutest  detail,  and  alwa3's  to 
its  detriment.  Such  legislation  exasperates  Mr.  Dillon 
the  more  because  it  originated  in  States  ' '  which  happened 
to  be  the  communities  that  owe  their  birth,  existence 
and  prosperity  to  these  very  railwa3's. "  Mr.  Dillon  then 
gives  vent  to  his  wrath  by  the  use  of  such  terms  as  im- 
pertinence, ignorance  and  demagogism.  He  holds  that 
legislative  enactments  as  to  the  rights  and  liabilities  of 
railway  corporations  are  useless,  ' '  because  the  common 
law  has  long  since  established  these  as  pertaining  to  com- 


RailroaJ  Literature — Continued.  275 

moil  carriers,  and  the  courts  are  open  to  redress  all  real 
grievances  of  tlie  citizen."  Upon  tliis  tlieory  we  might  as 
well  dispense  with  tlio  legislative  department  of  the  Gov- 
ernment, for  there  is  no  relation  in  tlie  community  to 
which  the  principles  of  the  common  law  can  not  be 
applied.  Besides  this,  Mr.  Dillon  entirely  ignores  the 
fact  that  the  railway  company  is  not  only  a  common  car.- 
rier,  but  the  keeper  of  the  highway,  and  as  such  is  sub- 
ject to  Grovernment  control  as  much  as  the  turnpike  toll- 
gate  keeper  or  the  collector  of  customs.  "Then  as  to 
prices."  Mr.  Dillon  continues:  "These  will  always  be 
taken  care  of  by  the  great  law  of  competition,  which 
obtains  wherever  any  human  service  is  to  be  performed 
for  a  pecuniary  consideration.  That  any  railway,  any- 
where in  a  republic,  should  be  a  monopoly,  is  not  a  sup- 
posable  case." 

Like  the  rest  of  railwa}'  men,  Mr.  Dillon  excels  in 
painting  dark  pictures  of  railroad  catastrophes.  A  sample 
production  of  his  art  is  here  presented : 

''One  of  the  greatest  dangers  to  the  community  in  a 
republic  is  this:  that  it  is  in  the  power  of  reckless,  mis- 
guided or  designing  men  to  procure  the  passage  of 
statutes  that  are  ostensibly  for  the  public  interest  and 
that  may  lead  to  enormous  injuries.  Let  us  imagine  for  a 
moment  that  all  railways  in  the  United  States  were  at  once 
annihilated.  Such  a  catastrophe  is  not,  in  itself,  incon- 
ceivable; the  imagination  can  grasp  it,  but  no  imagina- 
tion can  picture  the  infinite  sufferings  that  would  at  once 
result  to  every  man,  woman  and  child  in  the  entire  coun- 
try. Now,  every  step  taken  to  impede  or  cripple  the  busi- 
ness and  progress  of  our  railways  is  a  step  towards  just 
such  a  catastrophe,  and  therefore  a  destructive  tendency." 

Mr.  Dillon,  losing  sight  of  all  other  interests,  did  not 
think  that  his  nonsensical  mode  of  reasoning  would  apply 
equally  well  to  them.    Let  us,  for  instance,  imagine  for  a 


276  The  Railroad    Question. 


moment  that  all  of  the  farms  of  the  United  States  were  at 
once  annihilated.  Can  the  imagination  picture  the  infinite 
sufferings  that  would  at  once  result  to  every  man,  woman 
and  child  in  the  whole  country?  Now,  is  not  an}'  step 
taken  to  impede  or  cripple  the  business  of  farming  a  step 
towards  just  such  a  catastrophe,  and  therefore  of  a  destruc- 
rive  tendeuc}'?  Mr.  Dillon  then  avails  himself  of  an 
opportunity  to  give  the  people  of  the  United  States  some 
gratuitous  advice  when  he  says: 

' '  We  do  not  arrogate  superior  wisdom  or  intelligence  to 
ourselves  when  we  suggest  to  the  people  of  the  United 
States,  and  especially  that  portion  of  the  country  where 
railroads  have  been  the  subject  of  what  we  consider  to  be 
excessive  legislation,  that  the  rational  mode  of  treating 
any  form  of  human  industry  that  has  for  its  object  the 
performance  of  desired  and  lawful  service  is  to  let  it  alone, 
and  that  the  railway  is  no  exception  to  this  principle. '' 

This  is  the  very  plea  that  Jefferson  Da\'is  made  when  he 
kindled  the  flame  of  treason. 

In  the  March,  1891,  number  of  the  Forum,  Mr.  W. 
M.  Acwoi'th  discusses,  under  the  title  ' '  Railways  under 
Government  Control,"  the  working  of  the  railway  systems 
of  the  different  nations.  He  holds  that  the  management 
of  railroads  which  are  the  property  of  the  State  is,  as  a 
rule,  greatly  inferior  to  the  management  of  those  roads 
which  are  the  property  of  private  trading  corporations  ; 
he  assigns  to  the  I'ailway  experts  of  England  and  America 
the  first  places  among  the  railway  experts  of  the  world, 
and  appears  to  attribute  all  the  good  in  the  railroad  man- 
agement of  these  countries  to  the  absence  of  State  inter- 
ference, and  all  the  evil  in  the  management  of  the  rail- 
roads of  other  countries  to  the  fact  that  such  interference 
exists.  He  says  of  the  railroads  of  England  and  the 
United  States  : 


Rixilroad  Lif(  rafnre — ConfinucJ.  277 

"In  speed  and  accommodation,  in  the  energy  whicli 
pushes  railways  into  remote  districts,  and  in  the  skill 
which  creates  a  traffic  where  no  traffic  existed  before, 
they  stand  to-day  in  the  fi'ont  rank,  as  they  have  stood 
for  the  last  half  century.  To  say  that  they  are  very 
far  from  perfect  is  nothing  ;  it  is  only  to  say  that  they 
are  worked  by  human  agency.  Their  worst  enemies  will 
scarcely  deny  that  they  are  at  least  alive;  so  long  as  there 
is  life  there  ma}'  be  growth,  and  we  may  hope  to  see  them 
outgrow  the  faults  of  their  youth.  The  charge  made 
against  State  railway  systems  is  that  they  are  incapable 
of  vigorous  life.  The  old  adage  which  proclaimed  that 
'  necessity  is  the  mother  of  invention  '  has  been  re-stated 
of  late  years  ag  the  law  of  the  survival  of  the  fittest  in 
the  struggle  for  existence.  If  the  doctrine  is  true,  the 
State  railway  system,  relieved  from  the  necessity  of 
struggle,  must  cease   to  be  fit  and  will  fail  to   survive." 

While  it  is  not  intended  to  enter  here  into  a  defense  of  a 
State  railway  system,  it  may  justly  be  questioned  whether 
' '  the  State  railway  system,  relieved  from  the  necessity  of 
struggle,  must  cease  to  be  fit  and  will  fail  to  survive. " 
The  growth  of  the  State  system  in  Europe  is  in  itself  a 
sufficient  refutation  of  Mr.  Acworth's  theory.  The  mail 
service  has  for  several  hundred  years  been  a  monopoly  of 
the  government;  but,  while  it  is  far  from  being  perfect, 
it  remains  to  be  demonstrated  that  private  enterprise 
could  give  to  the  public  a  better  service  in  the  long  run. 

Mr.  Acworth  is  an  Englishman  who  in  former  years 
•wrote  many  bitter  things  concerning  the  abuses  which  he 
then  thought  he  saw  in  the  management  of  the  railroads 
of  his  native  country,  which,  according  to  his  own  state- 
ment, are,  besides  those  of  the  United  States,  the  only 
roads  in  the  world  for  whose  regulation  competition  has 
been  relied  upon  in  the  past.  Mr.  Acworth  has  become  a 
convert  to  the  laissez  faire  theory  of  dealing  with  railroads 
and  now  evinces  an  unusual,  but  perhaps  pardonable,  zeal 


278  '  The  Railroad   Question. 

in  the  defense  of  his  new  position.  In  the  preface  to  his 
book,  ''The  Railways  of  England,"  he  saj's  upon  the  sub- 
ject: 

"I  have  published  before  now  not  a  few  criticisms 
(which  were  meant  to  be  scathing)  on  English  railwa^-s 
auonymoush'.  I  find  myself  using,  under  my  own  name, 
the  language  of  almost  unvarying  panegyric.  This  is 
partly  to  be  explained  by  the  plan  of  the  book,  which  pro- 
fesses to  set  before  the  reader  those  points  on  each  line 
which  best  merit  description — its  excellencies,  therefore, 
rather  than  its  defects.  Much  more,  however,  is  it  due  to 
a  change  of  opinion  in  the  writer.  ...  I  have  found  in  so 
many  cases  that  a  satisfactory  reply  existed  to  ni}'  former 
criticisms,  that  I  have  perhaps  assumed  that  such  an 
answer  would  be  forthcoming  in  all ;  and  if  I  have  taken 
up  too  much  the  position  of.  an  apologist,  where  I  should 
have  been  content  to  be  merely  an  observer,  let  me  plead 
as  my  excuse  that  I  am  only  displaying  the  ti'aditional 
zeal  of  the  new-made  convert." 

Prof.  Hadley,  of  whose  work,  ' '  Railroad  Transporta- 
tion, its  History  and  its  Law,"  mention  has  been  made 
above,  contributed  an  article  to  the  April,  1891,  number 
of  the  Forum,  under  the  title  ' '  Railway  Passenger  Rates. " 
He  endeavors  to  show  that  the  high  passenger  rates  of 
American  railroads  are  due  solely  to  superior  service.  He 
says: 

"Continental  Europe  pays  two-thirds  as  much  as 
America  or  England  and  gets  an  inferior  article.  India 
pays  still  less  and  gets  still  less.  The  difference  is  seen  * 
both  in  quality  and  quantity  of  service.  In  India  express 
trains  rarely  run  at  a  greater  speed  than  25  miles  an 
hour.  In  Germany  and  France  their  speed  ranges  from 
25  to  35  miles  an  hour,  and  only  in  exceptional  instances 
is  more  than  40  miles  an  hour.  In  the  United  States 
and  in  England  the  maximum  speed  rises  as  high  as  50, 
or,  in  exceptional  instances,  60  miles  an  hour.  With 
regard  to  the  comfort  of  the  cars   in  different  countries, 


Railroad  Literature — Continned.  271) 


there  is  more  room  for  dift'ereiice  of  opinion  ;  l)ut  tlieve 
can  be  no  doubt  tliat  the  average  traveler  in  the  United 
States,  or  even  in  tlie  English  third-class  car,  fares  better 
than  he  would  in  the  corresponding  class  on  continental 
railroads,  and  infinitely  better  than  the  bulk  of  travelers 
in  British  India.  ' 

It  may  be  admitted  that  upon  the  whole  the  speed  of 
American  and  English  railroads  is  greater  than  that  of 
continental  roads,  jet  the  difference  is  much  less  than  Mr. 
Hadley  would  make  us  believe.  The  fast  trains  of  the 
Berlin  and  Hambui'g Railroad,  according  to  Rolls  "Rail- 
road Encyclopedia,"  make  the  distance  of  179  miles  in 
three  hours  and  forty-four  minutes.  The  average  speed  is 
therefore  48  miles  an  hour.  There  are  but  few  lines  in 
the  United  States  whose  regular  express  trains  run  at  a 
greater  speed.  The  express  trains  of  the  Berlin  and 
Brunswick  line  make  -ib^  miles  an  hour.  Trains  are  run 
on  the  Vienna  and  Buda-Pesth  Railway'  at  the  rate  of  42 
miles  an  hour  and  on  the  Paris  and  Calais  Railway  at  a 
rate  of  over  40  miles  an  hour.  Official  reports  give  the 
average  speed  of  express  trains  in  Northern  Germany  as 
32.2  miles  per  hour,  which  is  considerably  more  than  the 
average  speed  of  our  "Western  trains,  upon  which  the  rates 
charged  are  twice  as  high  as  those  charged  by  German 
roads.  The  average  speed  of  the  express  trains  in  Eno-- 
land  was  35.7  miles  per  hour  in  1890,  in  the  Netherlands 
30.7  miles,  in  France  30  miles,  in  Denmark  and  Southern 
Germany  28.8  miles  and  in,  Austria  27.8  miles  per  hour. 
Accurate  statistics  showing  the  average  speed  in  America 
are  not  in  existence,  but  it  may  well  be  questioned 
whether  the  difference  between  the  speed  of  American 
and  European  trains  is  sufficient  to  justify  upon  that 
score  any  essential  difference  in  the  rates.  Mr.  Hadley's 
statement  that  the  average  traveler  in  the  United  States, 


280  The  Railroad   Question. 

or  even  in  the  English  third  class,  fares  better  than  he 
would  in  the  corresponding  class  on  continental  railroads, 
is  far  too  sweeping  to  be  true.  It  is  certain  that  the 
Belgian,  German,  Austrian  or  French  second-class 
coupes  are  much  to  be  preferred  to  the  smoking  and  emi- 
grant cars  which  in  America  are  made  to  take  their 
places. 

To  prove  that  much  more  work  is  demanded  of  Am- 
erican railroads  than  of  European  railroads,  Mr.  Hadley 
presents  the  following  table: 

Annual  Train 
Service  per 
Miles  run  by  Trains  liead  of 

Countries.  Population.  annually.  Population. 

United  States 61,000,000 724,000.000.  .'....  13 

(1889) 

Great  Britain 38,000,000 303,000,000 8 

(1889) 

Germany  (1889) 48,000,000 181,000,000 3% 

France  (1888) 38,000,000 145,000,000 3% 

Austria-Hung-ary  .  .40,000,000 66,000,000 1?^ 

(1887) 

India  (1889) 200,000,000 51,000,000 OX 

And  he  adds :  ' '  These  figures  are  for  passenger  trains 
and  freight  trains  together,  as  some  countries  do  not  give 
statistics  of  the  two  separately;  but  the  general  results 
would  be  nearly  the  same  if  passenger  trains  alone  could 
be  considered.  The  figures  show  that,  for  every  man, 
woman  and  child,  a  train  is  run  twelve  miles  annually  in 
the  United  States,  in  Great  Britain  eight  miles,  in  Ger- 
many or  France  a  little  less  than  four  miles,  in  Austria 
not  much  more  than  a  mile  and  a  half,  and  in  British 
India  less  than  a  quarter  of  a  mile." 

This  statement,  even  if  correct,  is  certainly  misleading. 
No  allowance  is  made  for  the  greater  distances  and  the 
greater  average  haul  in  America,  and  none  for  our  bulky 


Railroad  Literature. —  Continued.  281 

raw  products,  which  require  more  car  room  than  the  manu- 
factured goods  predominating  as  freight  in  Europe. 

If  Mr.  Hadley's  statement  of  miles  run  by  trains 
annually  is  used  in  connection  with  Mr.  Poor's  statement 
showing  the  length,  for  1889,  of  the  railroads  of  the 
countries  given  in  the  above  table,  it  can  be  shown  that 
the  average  number  of  trains  run  annually  per  mile  is  con- 
siderably less  here  than  in  Europe: 

Average  Number 
Length  of  Rail-        Miles  run  by  of  Trains 

road  in  miles  Trains  per  mile  per 

Countries,  (1889).  annually.  annum. 

United  States 161,396 724,000,000 4,485 

Great  Britain 19,930 303,000,000 15,203 

Germany 25,360 181,000,000 7,137 

France 21,910 145,000,000 6,618 

Austria-Hung-ary  . .    15,990 66,000,000 4,127 

It  is  seen  that  while  the  average  number  of  trains  run 
per  mile  per  annum  is  only  4,485  in  the  United  States,  it  is 
6,618  in  France,  7,137  in  Grcrmany,  and  15,203  in  Great 
Britain.  In  Austria-Hungary  it  is  somewhat  less  than 
hei'e.  It  is  not  claimed  that  this  is  in  every  respect  a  fair 
argument ;  but  it  is  at  least  as  fair  as  Mr.  Hadley's.  As  has 
been  stated  before,  the  average  earnings  per  train  mile  are 
larger  in  the  United  States  than  in  most  nations,  and, 
excepting  Sweden,  railway  capital  has  the  highest  gross 
earnings  of  any  nation  in  the  world ;  and  when  Mr.  Hadley 
bases  his  argument  in  favor  of  higher  rates  for  American 
railroads  than  for  those  of  Europe  upon  the  claim  that 
the  latter  secure  larger  train  loads,  he  simply  reasons 
from  false  premises. 

Mr.  Hadley  then  continues: 

"  But  why  cannot  our  railroad  men,  with  our  present 
train  service,  secure  larger  loads  by  making  lower  rates, 
and  give  us  cheap  service  as  well  as  plenty  of  it?  Why 
cannot  we  secure  two  good  things  instead  of  one?  For 
two  reasons :  First,  because  it  is  not  certain  that  low  rates 


282  The  Railroad   Question. 

will  be  followed  b}'  greatly  increased  travel ;  second,  be- 
cause such  increased  travel  would  not  be  so  economical  to 
handle  in  America  as  it  is  in  Europe.  It  is  wrong  to  as- 
sume that,  because  reductions  of  charges  in  Europe  have 
increased  travel  enormously,  they  would  have  a  propor- 
tionate effect  in  America  and  a  corresponding  advantage 
in  American  railroad  economy.  It  is  a  somewhat  signifi- 
cant fact  that  second-class  trains  at  reduced  rates  have 
been  extremely  successful  in  Europe  and  not  at  all  so  in 
America.  Other  things  being  equal,  the  American  public 
would  be  glad  to  have  its  travel  at  lower  fares;  but  it  cares 
more  for  comfort  and  speed,  and  for  being  able  to  travel 
at  its  own  times,  than  for  a  slight  difference  in  charge. 
The  assumption  so  frequently  made,  that  a  reduction  in 
fares  would  cause  an  enormous  increase  in  travel  in  this 
country,  is  for  the  most  part  a  pure  assumption,  not  borne 
out  by  the  facts." 

The  great  increase  in  business  which  has  everywhere 
followed  reductions  in  postage  rates,  telegraph  rates  and 
street-carfares,  as  well  as  railroad  rates,  sufficiently  refutes 
the  assertion  that  it  is  not  certain  that  low  rates  would  be 
followed  by  greatly  increased  travel.  If  the  second  class 
has  not  been  as  successful  here  as  in  Europe  this  is  solely 
due  to  the  fact  that  the  American  railroad  companies  hai^e 
systematically  discouraged  second-class  travel  by  forcing 
passengers  into  filthy  and  over-crowded  cars.  The  state- 
ment that  increased  travel  would  not  be  so  economical  to 
handle  in  America  as  in  Europe  scarcely  needs  a  reply.  If, 
as  Prof.  Hadley  says,  the  American  public  demand  more 
frequent  trains  than  the  people  of  Europe,  and  if  these 
frequent  trains  are  not  at  present  profitable  to  our  railroad 
companies,  it  would  seem  to  be  plainly  to  their  interest  to 
hold  out  everj^  inducement  to  the  public  to  increase  travel 
and  thus  fill  their  trains. 

Mr.  Hadley  does  not  aid  his  argument  when,  referring 
to  the  Hungarian  zone  systemr,  he  says:     "  The  impor- 


K'dh'iKtd  Liff'fiifiire. — C(nif))iiirfJ,  2S3 


tance  of  the  zone  system  in  Austria  and  in  Hungaiy  lies 
in  the  fact  that  its  adoption  was  accompanied  by  a  great 
reduction  in  rates.  The  unit  rate  for  slow,  third-class 
trains,  which  had  previous!}'  been  nearl}'  a  cent  and  a  half 
a  mile,  was  reduced  to  less  than  one  cent.  .  .  .  The  use  of 
railroads  under  the  new  system,  though  vastly  greater 
than  it  was  before,  is  vastly  less  than  that  of  a  well- 
managed  American  road  at  American  rates."  Mr.  Hadley 
inadvertently  presents  here  one  of  the  very  best  reasons 
why  our  passenger  rates  should  be  reduced. 

The  fact  is,  railroad  men  are  opposed,  and  always  have 
been  opposed,  to  reduction  of  rates,  and  to  all  progressive 
movements  that  require  increased  expenditures  or  threaten 
to  temporarily  reduce  their  revenues.  AVhen  the  intro- 
duction of  the  zone  system  was  first  advocated  in  Hun- 
gary it  was  opposed  by  just  such  men  and  just  such 
arguments. 

No  one  can  contradict  the  following  facts,  viz. :  That  the 
average  cost  of  European  roads  is  much  greater  than 
that  of  American  roads;  that  the  number  of  railroad 
employes  per  mile  is  much  greater  there  than  here;  that 
much  larger  sums  are  expended  for  repairing  and  improv- 
ing the  roads,  and  that  therefore  the  lives  of  passengers 
are  much  safer  in  Europe  than  in  America;  and  that  the 
average  speed  and  corresponding  accommodations  of 
European  trains,  and  especially  those  of  England,  Ger- 
many, France  and  Austria-Hungary^,  compare  quite  favor- 
abl}'  with  the  average  speed  and  corresponding  accommo- 
dations of  our  roads.  It  is,  under  these  circumstances, 
absurd  to  claim  that  the  higher  prices  charged  by  Ameri- 
can roads  are  due  to  the  greater  cost  of  service. 

Mr.  Hadleys  labors  as  a  railroad  author  have,  it  seems, 
greatly  increased   his   corporation   bias.     In   an  address 


284  The  Railroad  Qncsfion. 

which  he  delivered  before  the  American  Bankers'  Asso- 
ciation at  New  Orleans  in  November,  1891,  upon  the  sub- 
ject of  "  Recent  Railroad  Legislation  and  its  P]ffects  upon 
the  Finances  of  the  Country,"  he  made  a  number  of  asser- 
tions which  ill  comport  with  the  fairness  of  a  public 
statistician  or  the  wisdom  of  a  Yale  professor.  After  a 
few  introductory  remarks,  Prof.  Hadley  made  the  follow- 
ing statement: 

"Every  one  knows  that  railroad  property  has  fallen  in 
value  since  the  passage  of  the  Interstate  Commerce  Act 
four  years  and  a  half  ago  ;  few  have  made  any  accurate 
estimate  of  the  amount  of  that  fall.  Let  us  take  the 
stock  of  the  leading  railroad  S3'stems  centering  in  Chi- 
cago as  a  type.  Here  we  find  an  aggregate  shrinkage  of 
over  $60,000,000,  or  more  than  one-quarter  of  the  par 
value  of  the  stocks. 

Par  Value.  Price.  Shrinkage. 

Apr.  4,     Nov.  4, 
1887.         1891. 

C,  M.  &  St.  P S30,904,261  93  75  S  5, .560,000 

"     Preferred     21,555,900  122  119  647,000 

C.  &  N.   W 31,365.900  121  116  1,568,000 

"     Preferred     23,325,454  148  139  2,009,000 

C,  R.  I.  &  P 41,960,000  126  82  18,462,000 

C.,B.  &Q 77,540,500  140  98  32,567,000 

Total $225,051,000  $60,815,000 

The  table  shows  that  fift^'-one  million  of  these  sixty 
million  dollars  are  the  shrinkage  of  the  Chicago,  Rock 
Island  and  Pacific  and  the  Chicago,  Burlington  and 
Quincy  stocks.  It  is  surprising  that  Prof.  Hadley  should 
be  ignorant  of  the  real  causes  of  this  depreciation,  which 
are  known  to  nearly  everj'  Granger  in  the  West.  In  1887 
the  Chicago,  Rock  Island  and  Pacific  Railroad  Company 
owned  1,121  miles  of  road,  only  172  of  which  were  out- 
side of  the  States  of  Illinois  and  Iowa.  In  1891  the 
same  company  owned  2,725  miles  of  road,  with  1,776 
miles  outside  of  Illinois  and  Iowa   and  scattered  through 


Railroad  Literature — Continued .  285 

Missouri,  Kansas,  Nebraska,  Colorado,  Indian  Territory 
and  Oklahoma.  In  Kansas  alone  the  Rock  Island  system 
grew  from  two  miles  in  1887  to  1,059  miles  in  1891.  In 
other  words,  to  a  little  over  a  thousand  miles  of  good  road 
the  company's  managers  added  nearly  2,000  miles  of 
poor  road  and  a  proportionate  amount  of  new  stock,  and 
the  depreciation  in  the  company's  stock  which  followed 
was  no  greater  than  one  should  have  expected  under  such 
circumstances.  The  managers  of  the  Rock  Island  and 
the  promoters  of  these  new  lines  found  the  transactions 
to  their  advantage,  while  the  original  stockholders  of  the 
company  had  to  bear  the  imposition,  as  hundreds  of 
thousands  of  railroad  stockholders  had  done  before  them. 
But  neither  the  law  of  Congress  nor  that  of  any  State 
was  to  blame  for  this  depreciation  of  the  Rock  Island 
stock . 

Since  1891,  railroad  stocks  have  advanced  on  an  aver- 
age at  least  twenty  per  cent. ,  and  during  the  last  sixty 
daj^s  have  declined  about  twenty-five  per  cent.,  although 
there  has  been  no  essential  change  in  interstate  or  State 
legislation.  It  is  certainly  as  fair  to  call  the  advance  the 
ultimate  result  of  restrictive  railroad  legislation  as  to 
attribute  to  that  legislation  the  shrinkage  above  referred  to. 
Extensive  speculations  similar  to  those  just  mentioned 
were,  during  the  same  period,  indulged  in  by  the  managers 
of  the  C. ,  B.  &  Q.  Railroad  Company  and  its  protege,  the 
C. ,  B.  &  N. ,  who,  in  addition  to  this,  greatly  injured  their 
road  in  1888  by  the  unjust  provocation  of  the  engineers' 
strike.  So  destructive  were  this  strike  and  its  consequences 
to  the  company's  business  that  it  is  difficult  to  account  for 
the  motives  of  those  who  provoked  and  stubbornly  pro  - 
longed  it  except  upon  the  theory  that  it  played  .an  im- 
portant role  in  their  stock  manipulations. 


28G  The   Railroad  Question. 

But  the  recent  legislation  of  a  considerable  number  of 
States  has,  in  Prof.  Hadley's  opinion,  been  still  more  det- 
rimental to  railroad  interests  than  that  of  Congress.  He 
says: 

' '  In  the  second  place,  the  legislatures  of  several 
States,  stimulated  by  the  example  of  Congress,  hastened 
to  pass  in  imitation,  of  the  Interstate  Commerce  Act,  laws 
which,  in  many  instances,  went  far  beyond  their  model  in 
point  of  stringency.  Examples  are  furnished  by  the  statutes 
of  Iowa,  Maryland,  Minnesota  and  South  Carolinain  1887- 
88 ;  of  Florida  in  1 888-89,  and  of  no  less  than  thirteen  States 
in  1889-90,  viz. :  Georgia,  Iowa,  Kentucky,  Massachu- 
setts, Mississippi,  New  Hampshire,  New  Jersey,  North 
Dakota,  Ohio,  Rhode  Island,  South  Dakota,  Virginia,  Wy- 
oming; as  well  as  by  the  recently  adopted  Constitution  of 
Kentucky.  The  legislation  of  1890-91  shows  a  slight 
reaction  against  the  movement  of  the  three  years  previous. 

"In  two  respects  the  State  legislatures  went  quite  be- 
yond the  scope  of  the  Interstate  Commerce  Act.  They 
tried  to  prescribe  safety  appliances  to  the  operating 
department,  and  rates  to  the  traffic  department.  Of  the 
first  of  tliese  groups  little  need  be  said,  except  that  as  a 
rule  they  have  failed  to  accomplish  any  great  progress 
toward  the  result  in  view,  and  have  in  some  instances 
actually  hindered  such  progress.  The  attempt  at  pre- 
scribing rates  was  more  serious.  It  involved  a  return  to 
the  methods  of  the  Granger  legislation,  fifteen  j'ears  earlier, 
which  liad  operated  so  disastrously  upon  the  railroads  and 
the  public  alike.  The  system  of  commissioners  with 
powers  to  make  schedules  which  should  be  at  least  prima 
facie  evidence  of  reasonable  rates  had,  during  the  inter- 
vening period,  never  been  wholly  abandoned;  but  the 
powers  thus  conferred  had  been  sparingly  exercised.  It 
was  either  left  unused,  as  was  generally  the  case  in  the 
North  from  1877  to  1887,  or  the  schedule  rates  were  put 
so  high  as  not  to  interfere  with  good  railroad  economy,  of 
which  examples  are  seen  in  Georgia  and  other  parts  of 
the  South.  But  from  the  year  1887  onward  there  was  a 
pressure  upon  the  Commissioners  to  make  schedules,  and 


Rallnxid  Litcraiuvc — Contlnned.  287 


to  make  them  low ;  unci  lest  these  boards  should  not  be 
able  to  reflect  the  popular  feeling  directl}'  enough,  they 
were,  in  some  instances,  no  longer  to  be  appointed  by  the 
(k>vernor,  but  elected  by  popular  vote.  The  law  which 
was  most  severely  applied  and  attracted  most  public  atten- 
tion was  that  of  Iowa.  .  .  The  agitation  against  the 
railroads  has  many  points  in  common  with  the  land  agita- 
tion in  Ireland.  Absentee  ownership  is  at  the  bottom  of 
the  trouble  in  either  case.  Property  is  owned  in  one 
place  and  used  in  another,  and  the  users,  not  satisfied 
with  the  conditions  of  use,  insist  on  taking  the  business 
direction  into  their  own  hands.  Thej'  claim  the  right  to 
fix  rates  in  Iowa  for  the  same  general  reasons  by  which 
they  claim  the  right  to  fix  rents  in  Ireland." 

It  must  be  presumed  that  Mr.  Hadley  is  ignorant  of  the 
fact  that  under  the  Iowa  Commissioners'  tariff  the  gross 
earnings  of  the  Iowa  railroads  increased  $7,000,000,  or 
more  than  17  per  cent.,  in  about  three  years,  and  their 
net  revenue  increased  in  proportion.  Never  have  the 
railroads  or  the  people  of  Iowa  enjoyed  a  healthier  pros- 
perity than  they  d(?  at  present.  It  is  true  that  the  State 
of  Iowa  denies  to  the  railroad  companies  the  right  to  charge 
what  they  please ;  but  this  claim  does  not  prevent  them 
from  doing  justice  to  the  absentee  owner  of  railroad  prop- 
ert}^  That  absentee  owners  of  property  are  disposed  to 
take  undue  advantage  of  those  who  use  it  is  illustrated  in 
the  veyy  case  which  Mr.  Hadlej'  cites.  So  flagrant  was 
the  injustice  done  by  the  English  landlord  to  the  Irish 
tenant  that  the  English  Parliament  was  constrained  to 
interfere  and  correct  it. 

Mr.  Hadley  says  further: 

"It  is  seen  in  Iowa  to-day,  where,  as  a  result  of  radical 
legislation  with  regard  to  rates,  railroad  construction  has 
almost  entirely  ceased,  the  average  for  the  years  1888-90 
being  less  than  fifty  miles." 

Now  Professor  Hadlev  hails  from  the  State  of  Connecti- 


288  The  Railroad  Quest !on. 


cut,  where  railroads  are  permitted  to  make  their  own 
tariffs  and  where  legislators  are  supposed  not  to  be  hostile 
to  them.  According  to  Poor's  Manual,  that  State  had 
1,004.02  miles  of  railroad  in  1888,  and  just  2.52  miles 
more  in  1891,  while  Iowa  had  8,364  miles  in  1888,  8,436 
in  1891,  and  8,505  miles  on  January  1,  1893.  Will  Mr. 
Hadley  please  explain  why  railroad  construction  has 
ceased  in  Connecticut  ?  Iowa  has  one  mile  of  railroad 
for  every  227  inhabitants,  and  Connecticut  has  one  for 
every  741  inhabitants,  although  the  per  capita  valuation 
is  $473  in  the  latter,  and  only  $273  in  the  former 
State.  Nor  have  other  Eastern  States  done  much  better 
than  Connecticut.  During  the  three  years  1888-1891 
there  were  built  74  miles  of  railroad  in  New  Hampshire, 
50  in  Vermont,  23  in  Massachusetts  and  9  in  Rhode 
Island.  Iowa  has  an  area  of  56,000  square  miles  and 
a  population  of  1,911,896,  an  assessed  valuation  of 
$520,000,000;  New  England  has  an  area  of  66,400 
square  miles,  a  population  of  4,700,7^5,  and  an  assessed 
valuation  of  $3,500,000,000.  Yet  Iowa  has  1,576  miles 
of  railroad  more  than  all  the  New  England  States  to- 
gether. She  has  a  railroad  net  as  close  as  that  of  the 
Empire  State,  having  one  mile  of  road  to  about  6^  miles 
of  territory,  although  the  population  of  that  State  is 
three  times  as  dense  as  hers.  Nevertheless,  railroad 
construction  is  at  present  active  in  Iowa,  several  lines  of 
road  are  in  the  process  of  construction  at  the  present 
writing,  and  there  is  every  indication  of  still  greater 
activity  in  the  near  future.  The  Raihoay  Age  of  March 
17,  1893,  in  a  detailed  list  of  new  lines  projected  or 
under  construction  in  the  United  States,  gives  for  Con- 
necticut only  32  miles,  while  it  gives  for  Iowa  930  miles. 
Mr.  Hadley  continues: 


Railroad  Literature — Continued.  289 

"It  is  seen  to  some  extent  in  the  Northwest  as  a 
whole.  At  the  close  of  the  year  1887  the  States  included 
\)j  Henry  V.  Poor  in  the  Central,  Northern  and  North- 
western groups  had  25,040  miles  of  road,  while  those  of 
the  South  Athmtic,  Gulf  and  Mississippi  Valley  had  but 
24,567.  To-day  this  relation  is  reversed:  the  North- 
west has  but  27,294  miles,  while  the  South  has  30,696." 

Had  Mr.  Hadley  taken  the  pains  to  look  up  the  popu- 
lation of  these  groups  he  would  have  found  that  the 
"  South  "  is  fully  three  times  as  populous  as  the  "North- 
west," and  that  therefore  his  figures  prove  nothing 
beyond  the  fact  that  at  the  present  rate  of  gain  the  rail- 
road facilities  of  the  South  will  in  a  quarter  of  a  century 
be  equal  to  those  of  the  Northwest  to-day. 

But  the  argument  is  weak  in  another  respect.  The 
State  in  the  Southern  group  that  made  by  far  the  greatest 
gain  in  railroad  mileage  during  the  period  mentioned  by 
Mr.  Hadley  is  Georgia,  which  gained  about  1,000  miles 
in  three  years,  yet  that  State  prescribed  rates  for  railroad 
companies  six  years  before  Iowa  did,  and  has  for  many 
years  exerted  a  more  thorough  control  over  her  railroads 
than  perhaps  any  other  State  in  the  Union.  The  smallest 
increase  is  in  West  Virginia,  which  during  the  period 
given  gained  an  average  of  only  69  miles  per  annum  ; 
and  3'et  in  West  Virginia  railroads  charge  their  own  rates 
and  usually  have  their  own  way. 

Finally  Prof.  Hadley  says  : 

' '  Where  are  we  to  find  the  limit  to  such  unwise  action  ? 
The  United  States  Supreme  Court  can  do  something  and 
has  shown  a  disposition  to  do  something.  In  the  Minne- 
sota cases  it  repudiated  the  doctrine  of  uncontrolled 
rights  on  the  part  of  the  legislature  to  make  rates,  as 
emphatically  as  it  repudiated  the  doctrine  of  uncontrolled 
rights  on  the  part  of  agents  of  the  corporation  in  the 
Granger  cases,  twelve  years  before." 


290  The  Railroad  Question. 

It  is  evident  that  Mr.  Hadle}'  is  as  much  mistaken  in 
his  interpretation  of  the  decision  of  the  court  as  he  has 
been  in  his  other  assertions,  as  will  be  seen  from  the  fol- 
lowing extract  from  Judge  Blatchford's  opinion  in  Budd 
vs.  New  York,  in  which  he  says,  ' '  The  main  question 
involved  is  whether  this  court  will  adhere  to  its  decision 
in  Munn  vs.  Illinois." 

The  court  first  quoted  from  the  opinion  of  Judge  Andrew 
of  the  Court  of  Appeals  of  New  York,  as  follows  :  ' '  The 
opinion  further  said  that  the  criticism  to  which  the  case 
of  Munn  vs.  Illinois  had  been  subjected  proceeded  mainly 
upon  a  limited  and  strict  construction  and  definition  of 
the  police  power  ;  that  there  was  little  reason,  under  our 
sj'stem  of  government,  for  placing  a  close  and  narrow 
interpretation  on  the  police  power,  or  restricting  its  scope 
so  as  to  hamper  the  legislative  power  in  dealing  with  the 
varying  necessities  of  society  and  the  new  circumstances 
as  they  arise  calling  for  legislative  intervention  in  the 
public  interest  ;  and  that  no  serious  invasion  of  constitu- 
tional guarantees  by  the  legislature  could  withstand  for 
a  long  time  the  searching  influence  of  public  opinion, 
which  was  sure  to  come  sooner  or  later  to  the  side  of  law, 
order  and  justice,  however  it  might  have  been  swayed 
for  a  time  by  passion  or  prejudice  or  whatever  aberra- 
tions might  have  marked  its  course." 

Judge  Blatchford  then  said:  "  We  regard  these  views, 
which  we  have  referred  to  as  announced  by  the  Court  of 
Appeals  of  New  York,  so  far  as  they  support  the  validity 
of  the  statute  in  question,  as  sound  and  just.  .  ,  .  "We 
must  regard  the  principle  maintained  in  Munn  vs.  Illinois 
as  firmly  established." 

General  Horace  Porter  has  made  a  contribution  to  the 
railway  rate  literature  by  an  article  which  appeared  in  the 


liailroad  Literature — Continued.  ■  291 


December,  1891,  number  of  the  North  American  Review. 
Unfortunately  many  of  the  General's  statements  are  either 
false  or  misleadhig.  Thus,  in  a  table  which  he  presents 
for  the  purpose  of  comparing  the  passenger  rates  of 
Europe  with  those  of  the  United  States,  he  gives  the  regular 
first-class  schedule  rates  for  the  United  Kingdom,  France 
and  Germany  and  the  average  earnings  per  passenger  per 
mile  for  this  country.  That  this  is  an  unfair  comparison 
needs  no  further  argument,  especially  when  it  is  remem- 
bered that  in  Europe  from  85  to  90  per  cent,  of  all  pas- 
sengers are  carried  in  the  third  class  at  a  regular  rate 
averaging  about  14-  cents  per  mile,  and  that  considerable 
reductions  are  made  for  excursion,  commutation  and 
return  tickets. 

But  General  Porter  says  concerning  American  rates: 
'  •  When  we  take  into  consideration  the   excursion  and 
the   commutation    rates,    we    find    first-class    passengers 
carried  as  low  as  half  a  cent  a  mile.  " 

Now  the  question  arises  whether  American  railway 
companies  carry  passengers  at  such  rates  with  or  without 
loss  to  themselves.  If  they  are  carried  at  a  loss,  an 
injustice  is  done  to  the  regular  passengers,  whose  fare 
must  not  only  make  up  the  loss,  but  yield  a  larger  profit 
than  would  otherwise  be  necessary.  If,  on  the  other 
hand,  a  rate  of  half  a  cent  a  mile  can  be  made  remun- 
erative, there  is  certainl}'  no  justice  in  maintaining  rates 
five  and  six  times  as  large  on  well-patronized  lines. 
General  Porter  places  stress  upon  our  superior  accommo- 
dations in  the  way  of  lighting,  ventilation,  ice-water,  lava- 
tories, and  free  carriage  of  baggage,  etc. ,  and  then  adds : 

'>  In  this  connection  we  must  also  recollect  that  the  cost 
of  fuel,  wages  and  all  construction  materials  is  consider- 
ably higher  here  than  in  Europe,  while  the  population 
from    which  the    railways   derive  their  support   is   much 


292  Th,'    R,nJrn,nJ   Qiirsfiun. 


mo^e  sparse;  the  United  States  having  166,000  miles  of 
railway  with  a  population  of  63,000,000,  while  Europe 
has  only  135,000  miles  with  a  population  of  335,000,000." 

We  grant  the  point  which  the  General  makes  on  venti- 
lation, ice- water,  etc.  ;  l)ut,  to  make  the  comparison  a  fair 
one,  he  should  also  have  referred  to  the  much  greater  cost 
of  European  roads,  to  their  much  greater  number  of 
employes  per  mile,  to  the  much  shorter  haul,  to  the 
higher  price  of  their  fuel,  to  the  superiority  of  their  road- 
bed and  the  greater  security  of  their  passengers.  More- 
over, whether  the  railroads  of  a  country  are  profitable  or 
not  cannot  lie  ascertained  by  merely  comparing  miles  of 
road  with  square  miles  of  territory  and  number  of  inhab- 
itants. British  India  has  a  population  of  275.000,000 
and  only  about  16,000  miles  of  railroad,  and  yet  her 
roads  are  scarcely  as  profitable  as  our  own.  China  has 
3,000,000  and  Asia  has  about  4,000,000  people  to  every 
mile  of  railroad,  but  so  far  their  railroads  have  proved  no 
bonanza.  The  question  is  not  how  many  people  there  are 
to  each  mile  of  railroad,  but  rather  to  what  extent  the 
railroad  is  used  by  the  people.  The  amount  of  freight 
carried  annuall}^  b}'  the  railwaj^s  of  the  CInited  States  is 
about  680,000,000  tons,  or  85,000.000,000  ton  miles,  and 
the  number  of  passengers  carried  is  about  535,000,000, 
representing  an  aggregate  of  travel  of  nearly  13,000,- 
000,000  miles.  This  shows  an  average  of  1,300  tons  of 
freight  carried  one  mile,  and  200  miles  traveled  annually 
for  each  inhabitant  of  the  nation,  and  a  greater  use  of 
railway  facilities  than  that  of  any  other  country  in  the 
world.  The  income  of  the  railroads  per  capita  is  $17  in 
the  United  States,  $11  in  the  United  Kingdom,  $5  in 
Glermany,  $4  in  France,  and  still  less  in  Italy,  Austria 
and  Russia.      The    average    freight  haul    is   63  miles  in 


Railroad  Literature — Continued .  293 


Europe  and  120  miles  in  tlie  United  States;  the  average 
passenger  haul  15  miles  in  Europe  and  24  miles  in  the 
United  States.  It  has  already  been  shown  that  the  aver- 
age earnings  per  train  mile  are  also  larger  here  than  there. 
Rolls  Encyclopedia  of  Railroads  for  1892  shows  that  in 
France  the  average  rate  for  all  traffic  for  the  year  1888 
was  for  passengers  1 .  45  cents  per  mile,  and  for  freight 
1.14  cents  per  ton  per  kilometer,  and  that  the  nation  had 
also  received  by  way  of  free  or  reduced  rates  on  Govern- 
ment business  during  that  year  benefits  to  the  amount  of 
$59,000,000.  Large  reductions  have  been  made  during 
the  past  year  in  passenger  rates. 

The  General  indulges  in  making  the  stereotyped  rail- 
road charge  that  "the  legislatures  of  several  of  the  States 
have  enacted  laws  to  effect  a  reduction  of  rates,  the  literal 
obedience  to  some  of  which  would  amount  to  the  practical 
confiscation  of  railway  property." 

The  General  or  any  of  his  friends  cannot  name  a  road 
that  was  ever  confiscated  by  legislation,  or  even  seriously 
injured.  It  is  a  fact  that  the  very  legislation  of  which 
railroad  managers  so  bitterly  complain  has  had  a  beneficial 
influence  on  railroad  earnings.  Thus,  in  Iowa,  where, 
according  to  the  testimony  of  railroad  men,  Grangerism 
has  reigned  supreme  during  the  past  few  years,  railroad 
earnings  increased  lietween  1889  and  1892  from  $37,000,- 
000  to  $44, 000, 000,  or  more  than  18  per  cent.  Still  better 
results  could  have  been  secui*ed  if  the  railroad  managers 
had  been  in  sympathy'  with  the  law.  Thei'e  is  no  doubt 
that  the)'  would  gladl}'  suffer,  or  rather  have  their  com- 
panies suffer,  a  loss  of  revenue,  if  this  would  lea^  to  a 
repeal  of  the  laws  and  restore  to  them  the  power  to  man- 
ipulate rates  for  their  own  purposes. 

But  the  Goiu'rnl  conios  to  tlic  main   point  of  Ills  article 


294  T,he  RaUrond  Question. 

when  he  complains  against  "the  unre^isonable  require- 
ments and  restrictions  of  the  Interstate  Commerce  Law. " 
He  says:        » 

' '  Principal  among  these  are  what  is  known  as  the  '  long 
and  short  haul  clause, '  which  prohibits  railway'  companies 
from  receiving  any  greater  compensation  in  the  aggregate 
for  a  shorter  than  for  a  longer  haul  over  the  same  line  in 
the  same  direction,  the  shorter  being  included  within  the 
longer  distance;  and  the  anti-pooling  clause,  which  pre- 
vents railway  companies  from  entering  into  any  agreement 
with  each  other  for  an  apportionment  of  joint  earnings." 

If  we  carefully  examine  the  railroad  literature  of  the 
last  four  years,  we  find  that  it  has  concentrated  its  efforts 
toward  the  creation  of  pul)lic  sentiment  in  favor  of  the 
repeal  of  these  two  clauses  of  the  Interstate  Commerce 
Law.  Railroad  men  are  well  aware  of  the  fact  that,  with 
these  two  clauses  stricken  out,  the  Interstate  Commerce 
Law  would  be  practically  valueless,  and  in  clamoring  for 
their  repeal  they  evince  a  persistency  worthy  of  a  better 
cause.  The  practices  which  these  clauses  aim  to  pro- 
hibit cannot  be  defended  upon  any  consideration  of  justice 
and  equity,  and  it  is  folly  to  expect  the  American  people 
to  sacrifice  their  convictions  of  right  to  the  selfish  interest 
of  a  comparatively  small  number  of  persons  interested  in 
the  manipulation  of  railroad  stocks. 

The  July,  1891,  number  of  the  Forum  contains  an 
article  on  the  operation  of  the  Interstate  Commerce  Law 
from  the  pen  of  Aldace  F.  Walker,  formerly  a  member 
of  the  Interstate  Commerce  Commission,  and  now  com- 
missioner of  the  Western  Traffic  Association.  Mr. 
Walker  evidently  belongs  to  the  old  school  of  railroad 
men,  who  have  not  yet  accepted  the  Granger  decision. 
Referring  to  it,  he  says: 

' '  This  decision  was  not  unanimous,  and  the  reasoning 


RdllriKtd   Liti  rutnrr — Continued.  295 

presented  was  not  so  convincing  as  to  coniuuuul  universal 
acceptiince.  It  was  at  once  challenged  by  the  corpora- 
tions, and  has  been  from  time  to  time  attacked  in  the 
same  tribunal;  it  has  not  yet  1)een  withdrawn,  but  it  has 
been  materially  modilied.  notably  in  a  case  from  Minne- 
sota, decided  in  ISiMJ.  when  it  was  estal)lished  that  there 
is  a  limit  beyond  which  the  State  cannot  go  in  reducing 
railway  rates,  which  limit  would  be  passed  in  case  a 
State  should  attempt  to  deprive  a  corporation  of  its 
propert}-,  without  due  process  of  law,  by  fixing  rates  too 
low  t^  permit  of  a  fair  remuneration  for  its  use.  A  large 
debatable  ground  yet  remains  open,  with  a  possibility 
that  the  position  of  the  railway  in  Federal  jurisprudence 
ma}'  eventually  be  radically  modified." 

The  passage  quoted  clearly  indicates  that  railroad 
men  expect  better  things  of  the  court  in  the  future,  but 
Mr.  "Walker  is  much  mistaken  in  supposing  tlie  court 
materially  modified  the  G-ranger  decision,  as  will  be  seen 
by  referring  to  the  case  of  Budd  vs.  the  State  of  Xew 
York,  decided  in  February.  1892,  l)y  the  same  court, 

Mr.  "Walker,  unlike  Mr.  Depew,  candidly  admits  the 
former  universality  of  the  evil  of  discrimination.  He 
sa^'s: 

' '  In  order  to  secure  tratlic,  a  railway  official  felt 
called  upon  to  underbid  his  rival.  He  gave  the  shipper 
a  private  rate,  a  rebate,  a  free  pass — an3-thing  in  the 
shape  of  a  concession  or  a  favor.  The  land  was  honey- 
combed with  special  arrangements  of  innumerable  forms, 
all  secret,  because  otherwise  the}'  would  have  been  use- 
less, and  all  forced  upon  the  carriers  b}^  the  exigencies  of 
unbridled  comi)etition.  Many  shippers  became  wealthy 
from  such  gains.  Others  were  envious  of  like  success. 
At  last  the  public  sense  of  justice  demanded  a  reform." 

And  Mr.  "Walker's  candor  rises  to  a  still  higher  pitch 
when  he  admits  that  the  ingenuity  of  railroad  managers 
has  found  ways  to  evade  the  Interstate  Commerce  Law. 
The  following    passage  from  the  Commissioner's  article 


296  The  Rwllroad  Question. 

will,  no  doubt,  be  a  great  surprise  to  such  law-abiding  and 
confiding  managers  as  Mr.  Depew: 

' '  There  was  nothing  in  the  law  specifically  forbidding 
the  payment  of  '  commissions, '  and  it  was  found  that  the 
routing  of  business  might  be  secured  by  a  slight  expendi- 
ture of  that  nature  to  a  shipper's  friend.  Other  kindred 
devices  were  suggested,  some  new,  some  old  ;  the  pay- 
ment of  rent,  clerk  hire,  dock  charges,  elevator  fees, 
drayage,  the  allowance  of  exaggerated  claims,  free  trans- 
portation within  some  single  State— a  hundred  ingenious 
forms  of  evading  the  plain  requirements  of  the  law 
were  said  to  be  in  use.  The  demoralization  was  not  by 
any  means  confined  to  the  minor  roads.  Shippers  were 
ready  to  give  information  to  other  lines  concerning  con- 
cessions which  were  offered  them,  and  to  state  the  sum 
required  to  control  their  patronage.  A  freight  agent,  thus 
appealed  to,  at  first  perhaps  might  let  the  business  go, 
but  when  the  matter  became  more  serious  and  he  saw  one 
large  shipper  after  another  seeking  a  less  desirable  route, 
he  was  very  apt  to  throw  up  his  hands  and  fall  in  with 
the  procession." 

Ml'.  Walker  is  very  severe  on  the  Interstate  Commerce 
Act,  which,  he  says,  might  in  its  present  form  "well  be 
entitled,  'An  act  to  promote  railway  bankruptcies  and  con- 
solidations by  driving  weak  roads  out  of  competitive 
business.'"  To  remedy  the  evil  which,  in  his  opinion,  the 
act  causes,  he  favors  the  granting  of  differentials  by  the 
stronger  to  the  weaker  roads.  Such  a  device  is  simply  a 
species  of  pool  under  a  less  offensive  name.  Its  manifest 
object  is  to  maintain  rates  through  a  conspiracy  of  rival 
railroads.      Mr.  Walker  admits  this  when  he  says  : 

"It  operates  in  practice  to  affect  a  distribution  of  the 
traffic  somewhat  roughly,  giving  rise  to  frequent  dissen- 
sions and  bickerings  over  the  '  differentials '  which  are 
allowed  ;  but  after  all  it  has  enabled  the  trunk  lines 
usually  to  secure  a  better  maintenance  of  tariff  rates  and 
a  better  observance  of  tlie   provisions  of  the  law  against 


Railroad  Literature — Continued.  207 

private  rebates  and  (liscriminations  than  has  been  attaina- 
l)le  in  other  sections  of  tlie  country  where  different  condi- 
tions make  sucli  an  arrangement  impracticable.  It  vividly 
illustrates,  however,  the  necessity  of  some  plan  l)y  which 
common  business  may  be  divided." 

This  problem,  which  apparently  causes  so  much  per- 
plexity to  railroad  managers,  would  soon  be  solved  if  rail- 
road abuses  were  done  away  with.  So  long  as  these 
abuses  exist  and  rates  are  maintained  by  artificial  means 
there  will  be  bickering  and  strife  for  business  which 
legitimately  belongs  to  others.  Mr.  Walker  then  bewails 
the  proscription  of  the  pool,  saying  : 

' '  It  may  be  stated  without  fear  of  contradiction  that  if 
the  carriers  had  been  left  free  to  make  arrangements 
among  themselves  upon  which  each  line  might  rely  for 
eventually  receiving  iu  some  form  a  fair  share  of  com- 
petitive traffic,  the  temptation  for  secret  rate-cutting 
would  have  been  in  great  measure  removed  and  the 
country  would  have  been  spared  most  of  the  traffic  dis- 
turbances and  illegitimate  contrivances  for  buying  busi- 
ness which  have  since  been  periodically  rife." 

This  ai'gument  amounts  to  this,  that,  rather  than  place 
a  law  upon  our  statute  books  which  reckless  railroad 
managers  might  be  strongly  tempted  to  violate,  they 
should  be  permitted  to  combine  and  control  the  highways 
and  levy  ad  Uhitn.m  upon  the  commerce  of  the  country 
It  is  a  most  preposterous  proposition. 

The  article  especially  condemns  the  long  and  short  haul 
clause  of  the  law.  That  this  clause  is  injurious  to  the 
commerce  of  the  country  is,  however,  nol  obvious  from  his 
reasoning.  Mr.  Walker  makes  the  statement  that  this 
clause  of  the  law  "has  removed  from  many  iol:)bing  cen- 
ters important  advantages  which  they  previously  had, 
and  has  enabled  interior  communities,  formerl}'  of  little 
apparent     consequence,    to    deal    directly    with     distant 


298  The  Railroad   Question. 

markets."  If  he  means  by  this  that  this  feature 
of  the  law  has  equalized  shipping  throughout  the  country, 
he  is  doubtless  right.  If  he  wishes  us  to  infer,  however, 
that  it  prevents  the  railroad  companies  from  doing  sub- 
stantial justice  to  all,  he  presumes  altogether  too  much 
upon  the  credulity  of  his  readers. 

Another  article  from  the  same  author  appeared  under 
the  title  "Unregulated  Competition  Self -destructive, "  in 
the  December,  1801,  number  of  the  same  periodical.  He 
commences  his  article  with  an  inquiry  into  the  pedigree 
and  merit  of  the  time-bonored  proverb,  ' '  Competition  is 
the  life  of  trade,  "  and  arrives  at  the  conclusion  that  the 
phrase  is  fatherless  and  insignificant.      He  says : 

"  'Competition  is  the  life  of  trade; '  'Competition  is 
the  death  of  trade ; '  one  phrase  is  as  true  as  the  other. 
For  all  that  appears,  it  was  a  toss-up  which  of  the  two 
should  become  current  as  the  expression  of  the  general 
thought.  ■' 

It  is  its  general  recognition  that  gives  a  truth  a 
proverb's  currency.  Mr.  Walker  sneers  at  a  disagreeable 
proverb  because,  like  the  majorit}'  of  his  colleagues,  he 
holds  the  masses  in  contempt.  He  gives  his  estimate  of 
popular  intelligence  in  the  following  words: 

' '  Unfortunately  most  men  do  not  think  worthily,  or  do 
not  think  at  all;  they  are  ruled  by  phrases,  and  they 
catch  the  crude  ideas  of  others  as  the}^  fly." 

Mr.  Walker's  whole  argument  is  one  in  favor  of  the 
legalization  of  the  pool,  though  he  carefully  avoids  the 
word  which  grates  so  harshly  on  the  American  ear.  He 
makes  the  broad  statement,  without  offering  the  least  proof 
in  support  of  it,  that  measures  have  been  everj'where 
adopted  "to  subdue  and  ameliorate  the  evil  results  of 
inordinate  and  excessive  competitive  strife,"  and  then 
he  asks  : 


Rallroiid  Literature — Continued.  299 

"  Has  not  the  time  come  for  a  reversal  of  the  legisla- 
tive attitude?  Would  it  not  be  well  for  Congress,  State 
legislatures  and  the  judiciary  to  cease  their  futile  attempts 
to  maintain  unqualified  freedom  of  competition,  and  sub- 
stitute therefore  a  recognition  of  the  right  of  every  indus- 
try to  combine  under  proper  supervision,  and  to  make 
agreements  for  the  maintenance  of  just  and  reasonable 
prices,  the  prevention  of  the  enormous  wastage  conse- 
quent upon  warlike  conditions,  and  the  preservation  of 
existing  institutions  through  the  years  to  come?  " 

Mr.  Walker  then  proceeds  to  make  the  bold  prediction 
that  revolution  and  anarchy  will  follow  if  the  demands 
of  the  railroad  corporations  are  not  complied  with^ 
saying  : 

"Unless  this  course  is  adopted  a  social  convulsion  may 
fairly  be  apprehended,  forced  by  the  universal  and  neces- 
sary repudiation  of  existing  laws  and  rules  of  decision^, 
and  by  the  general  formation  of  combinations  without  their 
pale." 

This  is  a  strange  threat  indeed,  and  unworthy  of  a  man 
who  has  held  as  great  a  public  trust  as  Mr.  Walker  has. 
The  article  also  contains  the  statement  that  combinations 
do  not  extinguish  competition.  "  They  regulate  it,"  says 
Mr.  Walker,  "with  more  or  less  efficiency,  and  they  often 
go  so  far  as  to  suspend  its  operation  in  respect  to  one  or 
more  important  features  of  the  strife ;  for  example,  the 
price  paid  or.  the  time  consumed.  But  as  long  as  the  em- 
ployer or  the  purchaser  has  a  choice,  so  long  there  is  com 
petition."  Here  is  a  sample  of  Mr.  Walker's  iron}-,  for 
the  choice  which  the  shipper  has  under  the  pool  is  simply 
Hobson's  choice. 

Mr.  Walker  has  also  an  article  in  the  August,  1892, 
number  of  the  Forum,  the  substance  of  which  is  to  show 
that  organizations  among  railroad  companies,  like  the 
Western  Traffic  Association,  are  necessarry  for  the  pur 


300  Thi'  Rdilroad  Question. 


pose  of  restraining  competition  among  them.  He  holds 
that  such  competition  as  exists  in  almost  all  other  lines 
of  business  ' '  is  radically  vicious  to  all  interests,  however 
pleasant  and  desirable  it  ma}'  seem  to  self-styled  anti- 
monopolists,"  and  that  "it  is  a  calamity  not  only  to  the 
owners  of  the  roads,  but  to  the  public  also." 

According  to  his  statement,  the  Traffic  Association  is 
simply  a  little  innocent  and  inoffensive  organization 
whose  duty  it  is  only  to  maintain  rates,  an^  he  sees 
nothing  wrong  in  allowing  a  few  representatives  of  cor- 
porations to  meet  in  secret  and  discuss,  scheme  and  levy 
such  a  tax  upon  the  commerce  of  this  country  as  may  suit 
their  convenience;  and  he  regrets  that  their  attempts  are 
' '  hampered  by  legislation  which  forbids  the  formation  of 
pools."  In  other  words,  he  proposes  to  have  the  case  in 
court  decided  by  a  jury  made  up  entirely  of  the  parties 
at  interest  in  the  case.  This  piece  of  effrontery  is  about 
on  a  par  with  the  average  argument  of  this  class  of 
pleaders. 

Suppose  we  apply  the  same  rule  to  other  classes. 
Take  the  farmers,  for  instance.  Let  them  have  an  organi- 
zation for  the  purpose  of  maintaining  rates,  with  their 
representatives  meeting  in  secret  and  fixing  the  price  of 
their  produce  and  asking  the  Govei'nment  to  enforce 
their  orders,  pools  and  edicts,  so  as  to  afford  them  relief 
from  selling  corn  at  ten  cents  per  bushel,  beef  and  pork 
at  a  dollar  and  a  half  per  hundred,  and  hay  at  two 
dollars  per  ton,  and  their  other  produce  at  proportionate 
rates.  Who  would  condemn  such  an  organization  more 
severely  than  the  advocates  of  the  Traffic  Association  ? 
They  never  find  terms  sufficiently  expressive  with  which 
to  condemn  the  Farmers'  Alliance  and  other  kindred 
associations,  which  are  organized   solely  for  the  purpose 


Railroad  Literature — Continued.  301 


of  lawfullj'  correcting  existiug  abuses  and  of  forming  a 
wholesome  public  sentiment. 

It  is  evident  that  some  progress  is  being  made  upon 
this  question,  as  Mr.  Walker  admits  that  ' '  the  fortunes 
which  have  been  made  are  seen  to  have  been  the  result  of 
dealings  in  stocks  and  in  titles,  the  consequences  of 
which,  if  involving  wrong,  are  rightly  charged  against 
the  lax  legislation  which  has  made  such  operations 
possible."  "  Every  person  seeking  for  the  services  of  a 
common  carrier  is  entitled  to  know  that  he  is  charged  no 
more  than  his  neighbor  who  obtains  the  same  service 
under  the  same  conditions."  "The  theory  that  any 
unjust  discrimination  or  unjust  preference  or  advantage 
in  respect  to  individuals,  communities  or  descriptions  of 
traffic  must  J)e  suppressed  by  the  State,  has  become 
firmly  lodged  in  legislation."  This  impi'ovement  in  the' 
sentiment  of  railroad  men  is  gratifying. 

This  gentleman,  as  has  already  been  stated,  was  for 
several  years  a  member  of  the  Interstate  Commerce  Com- 
mission, a  board  created  by  Congi'ess  for  the  special 
purpose  of  enforcing  the  law  which  he  so  unreservedly 
condemns.  No  doubt  Mr.  Walker  performed  the  duties 
of  his  office  as  he  understood  them;  but  if  he  held  then 
the  \iews  which  he  holds  now,  his  work  must  have  been 
a  hindrance  rather  than  a  help  to  the  commission. 

Among  financial  journals,  so  many  of  which  are  devoted 
to  the  support  of  vicious  and  demoralizing  methods,  and 
are  ever  ready  to  defend  whatever  is  bad  in  corporation 
management,  it  is  refreshing  to  find  occasionally  one  that 
exposes  abuses  and  favors  the  earning  of  legitimate  divi- 
dends, and  it  is  a  pleasure  to  quote  the  following  from  the 
June  number,  1892,  of  the  Bankers  Magazine: 

' '  There  are  two  widely  differing  theories  concerning  the 


302  77(1?  Railroad  Question. 

management  of  railroads  in  this  country;  one  theory  is 
that  profits  should  be  acquired  from  fluctuations  in  the 
stock,  and  the  other  is  that  the  profits  should  be  acqiiired 
in  the  old-fashioned  wrty,  by  performing  a  useful  service 
and  receiving  a  reward  therefor,  to  be  divided  among  the 
stockholders  in  the  way  of  a  dividend.  These  two  theo- 
ries are  so  different  in  their  practical  operation  that  they 
give  rise  to  the  most  diverse  consequences.  Of  course, 
many  railroads  are  not  dividend-earning,  and  with  these 
the  profits  to  the  managers  and  those  who  are  allied  with 
them  must  come  from  stock  fluctuations  and  from 
whatever  sucking  arrangements  can  be  devised  whereby 
their  vitality  or  sustenance  can  be  acquired  by  the  favored 
few  who  are  in  control.  Unfortunately,  there  are  many 
railroads  in  this  condition,  the  history  of  which  is  too 
well  known  to  require  description.  Once  in  control,  the 
way  is  easy  to  retain  it  and  to  make  money  by  a  thousand 
devices  which  ingenious  and  unscrupulous  managers  are 
constantly'  planning  and  putting  into  operation. 

' '  The  consequences  of  the  other  theory  are  as  different, 
both  to  the  corporate  property  and  to  the  public,  as  can  be 
imagined.  When  a  railroad  is  properly  managed  and 
earning  dividends,  a  policy  of  development  is  adopted, 
having  for  its  end  the  natural  expansion  of  the  property 
in  harmony  with  the  growth  of  the  country,  the  needs  of 
business  and  the  desires  of  the  people.  The  fruits  of 
such  a  policy  may  not  be  apparent  at  once,  but  they  inevi- 
tably come,  and,  when  they  are  reaped,  are  enjoyed  and 
appreciated  by  all.  Only  by  such  a  policy  can  our  roads 
ever  become  great,  commanding  the  confidence  of  the 
people,  and  fulfilling  their  highest  uses;  in  short,  only  by 
such  a  policy  can  a  railroad  be  brought  to  a  high  degree 
of  perfection. 

' '  The  difference  is  clearly  seen  by  contrasting  a  road  of 
this  character  with  one  that  is  run  by  the  Wall  Street 
method  for  stock-jobbing  purposes.  By  this  method  divi- 
dends are  not  regarded  as  of  so  much  consequence  to 
investors  as  an  instrument  or  argument  for  affecting  the 
value  of  the  stock.  In  other  words,  if  a  dividend  is  earned 
and  paid  at  all,  it  is  chiefly  as  an  instrument  or  agency 


Railroad  Literature — Continued.  303 


for  stock-jobbing  purposes,  and  not  because  the  road  is 
managed  primarily  for  this  purpose.  Furthermore,  divi- 
dends, too  often,  are  disregarded  altogether,  as  well  as 
any  policy  of  permanent  improvement  or  of  general  devel- 
opment. The  cardinal  idea  always  is,'  how  can  the  road 
be  maintained  and  mauipulatetl  so  as  to  cause  the  largest 
variations  in  the  stock  and  the  most  money  for  the  man- 
agers? 

"Too  many  managers,  as  is  well  known,  have  made 
great  sums  for  themselves  and  built  additions  long  in 
advance  of  their  means,  and  have  seriously  crippled  their 
corporations  by  so  doing.  But  they  have  made  fortunes 
for  themselves.  What  the  great  majority  of  mankind 
consider  is  the  immediate  present,  and  not  the  future. 

"  It  is  undoubtedl}'  a  hard  thing  for  those  who  are  con- 
ducting their  corporations  in  an  honest  and  able  manner, 
for  the  benefit  of  their  owners,  to  keep  still  while  their 
enemies  are  pounding  them  and  glorif3'ing  those  who  are 
managing  their  corporations  for  personal  and  corrupt  ends ; 
but  all  cheap  and  false  practices  must  finally  lead  to  dis- 
aster. We  hear  a  great  deal  of  this  kind  of  thing  nowa- 
days. One  of  the  evil  effects  of  speculation  and  news- 
paper reading  is,  that  people  have  got  in  the  way  of  not 
thinking  much  for  themselves;  of  regarding  as  truth  what- 
ever is  printed,  and  of  not  opening  their  eyes  wide  enough 
to  discover  the  shallowness  of  the  reasonings  and  false- 
hoods that  are  put  forth  at  the  behests  of  speculators,  or 
of  those  who  are  managing  corporations  for  speculative 
purposes.  The  American  people  have  had  an  amazing- 
experience  in  losses  from  following  advice  thus  plentifully 
and  freely  given ;  nevertheless,  there  seem  to  be  persons 
left  who  are  willing  to  listen  and  fall  into  the  old  ways 
and  be  trapped,  as  so  many  others  have  been  in  the  past. 
There  is  a  considerable  class,  having  means  and  nothing 
to  do,  who  perhaps  might  just  as  well  lose  their  money  in 
poker,  railroad  or  grain  speculation  as  in  any  other  way, 
for  this  furnishes  about  the  only  source  of  amusement  to 
them;  but,  after  all,  there  is  no  reason  wh)'  railroads 
should  be  managed  so  exclusively  for  the  amusement  of 
this  class.      The  time  is  coming,  and  probably'  is  not  far 


304  The  RdUrnnd  QHcsfiotK 


off,  when  they  will  get  enough  of  it;  and  raih'oad  invest- 
ors will  conclude  that  dividends  for  themselves  are  better 
than  profits  for  speculators;  and  when  they  do,  all  stock- 
jobbing managers  will  be  consigned  to  the  limbo  which  is 
their  proper  destination." 

This  magazine  is  edited  by  Mi'.  Albert  S.  Bolles,  author 
of  several  excellent  financial  works.  We  are  much  in- 
debted to  him  for  the  sound  banking  system  which  we  now 
have,  and  which  has  contributed  so  largel}^  to  the  unex- 
ampled prosperity  which  this  country  has  enjoyed  for  the 
last  thirty  years. 

Our  national  banking  system  illustrates  well  how  service 
able  the  corporation  ma}'  be  to  a  people  when  its  use  is 
restricted  by  wholesome  laws  to  the  performance  of  its 
proper  functions. 

The  old  United  States  Bank  was  organized  for  practi- 
cally the  same  purposes  as  our  present  national  banks, 
but  for  lack  of  proper  restrictions  its  use  was  soon  per- 
verted to  ignoble  purposes.  The  bank  managers  showed 
so  much  partiality  in  the  distribution  of  their  favors  and 
accommodations,  and  meddled  in  politics  to  such  an  ex- 
tent, that  the  people  became  disgusted  with  it,  and  a 
renewal  of  its  charter  was  refused. 

Mr.  Clay  clearly  saw  how  dangerous  a  great  money 
power  might  become  to  our  countr}^,  and,  in  opposing  the 
extension  of  the  bank's  charter,  said: 

' '  The  power  to  charter  companies  is  one  of  the  most 
exalted  attributes  of  sovereignty.  In  the  exercise  of  this 
gigantic  power  we  have  seen  an  East  India  Company  cre- 
ated, which  is  in  itself  a  sovereignty,  which  has  subverted 
empires  and  set  up  new  dynasties,  and  has  not  only  made 
war,  but  war  against  its  legitimate  sovereign!  Under  the 
influence  of  this  power  we  have  seen  rise  a  South  Sea  Com- 
pany, and  a  Mississippi  Company,  that  distracted  and 
convulsed  all  Europe,  and  menaced  a  total  overthrow  of 
all  credit  and  confidence,  and  universal  bankruptcy." 


Rdilnind    Tjlterntiirr — Cmifiit ncd.  805 


Can  we  afford  to  ignore  the  lessons  of  history? 

Mr.  Henr}-  Clews  makes  some  spicy  and  permanent 
observations  on  railroad  mens  methods  in  an  article  which 
recentl}'  appeared  in  the  Jidilwdi/  Age.  Mr.  Clews  seems 
to  have  but  little  confidence  in  the  average  railroad  direc- 
tor. He  advises  stockholders  to  exercise  constant  vigi- 
lance and  defensive  conservatism,  ' '  lest  they  become  the 
instruments  by  which  unscrupulous  and  crafty  directors 
work  out  schemes  that  are  in  reality  nothing  but  frauds 
or  robbery."     And  then  he  adds  : 

"In  estimating  corporate  acts  we  miist  never  forget 
that,  while  the  best  of  men  will  bear  watching  as  to  their 
indiAidual  dealings  with  others,  they  need  to  be  doubly 
watched  when  they  sit  around  a  corporation  board  and 
vote  as  to  transactions  in  respect  of  which  none  of  them 
can  be  called  to  personal  account.  Temptations  attack 
with  enormous  force  when  the  gains  are  prospectively 
great  and  the  risk  of  penalty  inappreciable  or  non-ex- 
istent." 

Mr.  Clews  also  tells  us  how  roads  are  wrecked  by  their 
boards  of  directors.  "  In  one  case,"  he  says,  '  •  the  stock 
of  a  leading  railway,  which  in  1880  sold  at  174,  in  1884 
sold  at  22|^,  and  in  1885  at  22.  This  vast  shrinkage  of 
value  was  not  owing  to  panic  or  to  stringency  of  money, 
nor  did  it  arise  from  a  diminution  of  traffic  on  the 
original  line  ;  but  it  was  because  consolidation  had  been 
pushed  to  an  extreme  by  the  directors  of  the  corporation, 
so  much  so  that  the  entire  system  3'ielded  no  dividends  ; 
a  fleet  and  useful  animal  had  been  loaded  down  with 
dead  wood  and  rubbish  till  he  could  scarcely  crawl  ;  bar- 
ren acres  had  been  added  to  an  originally  fruitful  farm 
until  the  whole  estate  could  hardly  pay  taxes  ;  a  mass  of 
rotten  apples  had  been  thrown  into  the  measure  with 
sound  fruit,  and  Ijuyers  refused  the  whole  as  a  mere  heap 


306  The  Railroad  Question. 

of  corruption.  And  it  was  generally  believed  that  the 
men  who  perpetrated  this  mischief  under  the  names  of 
'construction,'  'requisite  consolidation,'  'absorption  of 
necessary  branches, '  etc. ,  had  made  a  great  deal  of  money 
by  it  and  had  not  made  it  honestly.  But  it  was  all  done 
pursuant  to  legal  forms  and  by  boards  of  directors,  so 
that  the  defrauded  stockholders  were  without  remed}'. " 

Mr.  Clews  then  gives  us  a  more  detailed  account  of  the 
way  in  which  branch  roads  are  built  and  absorbed",  viz. : 

"Given  a  useful,  well  constructed,  dividend-paying 
road,  a  body  of  people  with  some  capital  and  political  in- 
fluence, aided  by  some  of  the  directors  of  this  prosperous 
line ;  construct  a  branch  road  to  some  outside  point ;  the 
more  important  such  point  the  better,  but  that  is  of  small 
consequence.  Tlie  road  gets  itself  built;  it  is  bonded  for 
more  than  it  cost,  and  it  cost  twice  as  much  as  it  ought, 
since  the  constructors  were  all  together  in  the  ring  and  have 
favored  each  other.  Then  the  capital  stock  is  fixed  at  so 
much,  and  this  is  mostly  distributed  among  the  construc- 
tors. The  road  then,  swelled  to  a  fictitious  price  of  three 
or  four  to  one,  and  not  worth  an3'thing  to  start  with,  is 
ripe  for  absorption  and  consolidation.  Its  directors  and 
those  of  the  main  line  meet,  confer  and  vote  the  measure 
through.  They  all  profit  by  it,  more  or  less,  but  their 
profits  are  enormously  in  excess  of  the  trifling  losses  due 
to  the  shrinkage  of  values  of  the  shares  of  the  main  line. 
A  director  of  the  mainline  may  perhaps  lose  $20,000  on  a 
thousand  shares,  but  what  is  this  when  compared  to  a  gain 
of  hundreds  of  thousands  in  his  holdings  of  the  branch 
road,  whose  liabilities  are  assumed  by  his  victimized  cor- 
poration? x\nd  such  a  director  would  not  be  equal  to  the 
demands  of  his  covetousuess  if  he  had  not  sold  thousands 
of  shares  short,  in  anticipation  of  the  fall  which  the  trans- 
actions of  himself  and  his  associates  were  inevitably  bound 
to  produce.  " 

Mr.  Clews  concludes  his  article  with  the  following 
passage : 


Railroad  Literatifre — Continued.  307 

' '  The  profits  realized  on  the  speculative  constructions 
are   enormous   and   have   constituted   the  chief  source  of 
the  phenomenal  fortunes  piled  up  by  our  railroad  million- 
aires Avithin  the  last  twenty  years.      It  is  no  exaggeration 
to  characterize  tluvse  transactions  as  direct  frauds  upon  the 
public.      They  may  not  be  such  in  a  sense  recognized  by 
the  law,  for  legislation  has  strangely  neglected  to  provide 
against  their  perpetration;  but  morall}' they  are  nothing 
less,  for  they  are  essentially  deceptive  and  unjust,  and 
involve  an  oppressive  taxation  of  the  public  at  large  for 
the  benefit   of   a   few  indiA'iduals   who  have   given     no 
c(piivalent  for  what  they  get.     The  result  of  this  s^'stem 
is  that,  on  the  average,  the  railroads  of  the  country  are 
capitalized  at  probablj^    fi^illv  50  per  cent,   in  excess  of 
their  actual  cost.      The  managers  of  the  roads  claim  the 
right  to  earn  dividends  upon  this  fictitious  capital,  and 
it  is  their  constant  effort  to  accomplish  that  object.     So 
far  as  they  succeed  thej"  exercise  an  utterly  unjust  taxa- 
tion  upon   the   public   by   exacting   a   compensation    in 
excess  of  a  fair  return  upon  the  capital  actually  invested. 
This   unjust   exaction   amounts    to    a   direct  charge  and 
burden   on    the    trade    of    the   country  which   limits   the 
aliility  of  the  American  producer  and  merchant  to  com- 
pete   with    those    of    foreign   nations   and    checks   the 
development  of  our  vast  natural  resources.      In  a  country 
of    '  magnificent  distances  '  like  ours   the  cost  of  trans- 
portation  is  one  of   the  foremost  factors  affecting  the 
capacity  for  progress;  and  the  artificial  enhancement  of 
freight  and  passenger  rates  due  to  this  false  capitaliza- 
tion  has  been  a  far  more  serious  bar  to  our  material 
development  than  public  opinion  has  yet  realized.      The 
hundreds  of  millions  of  wealth  so  suddenly  accumulated 
by  our  railroad  monarchs  is  the  measure  of  this  iniquitous 
taxation,    this   perverted   distribution   of   wealth.      This 
creation   of   a   powerful    aristocracy    of    wealth,    which 
originated   in   a   diseased  system  of  finance,  must  ulti- 
mately  become   a    source   of    very    serious    social     and 
political    disorder.     The   descendants   of    the   mushroom 
millionaires   of   the   pi'csent   generation   will   consolidate 
into  a  Ijroad  and  almost  omnipotent  money  power,  whose 


308  The  Railroad  Question. 

sympathies  and  influence  will  conflict  with  our  political 
institutions  at  every  point  of  contact.  They  will  exercise 
a  vast  control  over  the  larger  organizations  and  move- 
ments of  capital;  monopolies  will  seek  protection  under 
their  wing,  and  by  the  ascendancy  which  wealth  always 
confers  they  will  steadily  broaden  their  grasp  upon  the 
legislation,  the  banking  and  commerce  of  the  nation." 

These  are  strong  words,  but  they  come  from  a  man 
whose  thirty  years'  experience  in  Wall  Street  enables  him 
to  speak  intelligently  upon  this  subject  and  who  certainly 
cannot  be  accused  of  being  pi'ejudiced  against  railroad 
men  or  corporate  investments.  In  a  recent  number  of 
his  WtrJcli/  Financial  Review  Mr.  Clews  said  of  the  rail- 
road stock  market: 

' '  Judgment  passes  for  little  in  estimating  the  future  of 
many  securities,  for  the  market  is  almost  wholly  under  the 
control  of  comparatively  few  persons,  whose  operations 
must  inevitably  influence  the  value  of  thousands  of  millions 
of  stocks  and  bonds.  Never  in  the  history  of  Wall  Street 
was  the  value  of  such  an  enormous  aggregation  of  securi- 
ties so  absolutely  under  the  control  of  so  small  a  circle  as 
at  this  time.  Such  a  state  of  afl'airs  cannot  be  considered 
satisfactory;  hence  not  onl}'  is  speculation  likely  to  be  un- 
healthily stimulated,  but  the  future  of  these  combinations 
gives  birth  to  a  variety  of  uncertainties  which,  while 
they  ma}^  elevate  prices,  will  certainly  not  add  to  their 
stability." 

If  the  silly  claim  of  railroad  men,  that  Western  people 
do  not  invest  in  railroad  securities  on  account  of  their  un- 
profitableness, needed  anj'  answer,  the  above  words  would 
furnish  it. 

The  May,  1893,  number  of  the  North  American  Review 
contains  an  article  entitled   ' '  A  Railway  Party  in  Poli- 
tics," by  Mr.  H.  P.  Robinson,  editor  of  the  Railway/  Age. 
Mr.  Robinson  belongs  to  that  class  of  reformers  who  can  • 
see  but  one  side  of  a  question,  and   only  a  short-sighted 


R(i!lr()(i<J    Ijllirature — Continued.  809 


view  of  that.  He  is  as  zealous  as  a, new  convert,  and  is 
expert,  in  the  ward  politician's  way,  in  defense  of  the 
worst  abuses  practiced  by  railway  men.     He  says: 

"That  the  right  to  'regulate'  the  railways,,  which  is 
vested  in  the  State,  has  now  been  carried  in  the  West  to  a 
point  not  only  beyond  the  bounds  of  justice,  but  beyond 
its  constitutional  limits,  and  that  it  would  soon  be  impos- 
sible for  any  railway  company  in  the  West  to  keep  out  of 
bankruptcy  unless  some  vigorous  and  concerted  action 
were  taken  to  arouse  public  opinion,  and  to  compel  a 
modification  of  the  present  policy. 

"  It  is  easy  to  see  how  much  strength  such  a  party,  if 
formed,  would  possess.  According  to  the  reports  of  the 
Interstate  Commerce  Commission  there  were  in  the  imme- 
diate employ  of  the  railways  of  the  United  States  a  year 
and  a  half  ago  749,301  men,  all  or  nearly  all  voters, 
which  number  has  now,  it  may  be  assumed,  been  increased 
to  about  800,000.  There  are,  in  addition,  about  one 
million  and  a  quarter  shareholders  in  the  railway  proper- 
ties of  the  country;  and  in  other  trades  and  industries 
immediately  dependent  upon  the  railways  for  their  sup- 
port there  are  estimated  to  be  engaged,  as  principals  or 
employes,  over  one  million  voters  more.  These  three 
classes  united  would  give  at  once  a  massed  voting  strength 
of  some  three  millions  of  voters.  There  are  also,  in  the 
smaller  towns  especially,  and  at  points  where  railway 
shops  are  located,  all  over  the  country,  a  number  of  per- 
sons, small  tradesmen,  boarding-house  keepers,  etc. ,  who 
are  dependent  for  their  livelihood  on  the  patronage  of 
railway  employes,  and  whose  vote  could  unquestionably 
be  cast  in  harmony  with  any  concerted  employes'  move- 
ment. Moreover,  unlike  most  new  parties,  this  party 
would  be  at  no  loss  for  the  sinews  of  war  or  for  the  means 
of  organization.  The  men  whom  it  would  include  form 
even  now  almost  a  disciplined  army.  With  them  co-ope- 
ration is  already  a  habit.  While  the  financial  backing 
and  the  commercial  and  physical  strength  of  which  the 
party  would  find  itself  possessed  from  its  birth  would  be 
practically  unlimited.  .  .  . 


310  Tlic  Railroad   Question. 

"For  the  present  it  seems  to  them  better  to  believe 
that  the  people — those  people  who  are  not  railway  men — 
are  acting  now  onl}-  in  ignorance,  and  that  as  soon  as  they 
see  the  truth  they  will,  by  their  own  instinctive  sense  of 
justice,  re-mould  their  opinions  and  their  policy  without 
political  coercion. 

"At  the  same  time  thsre  has  already  come  into  exist- 
ence in  some  of  the  Western  States  a  movement  which 
has  its  significance  and  its  practical  influence.  This  is 
what  is  called  the  Railway  Emploj^es'  Club  movement. 
It  started  in  Minnesota,  at  a  small  meeting  of  railway 
employes  held  in  Minneapolis  in  1888.  From  that  meet- 
ing the  movement  grew,  and  made  a  certain  feeble  efTort, 
not  entirely  unsuccessful,  to  influence  the  State  election 
in  the  fall  of  that  year.  13y  the  State  election  of  1890 
the  movement  had  grown  and  was  better  organized,  and 
the  Employes'  Club  did  exercise  considerable  influence  in 
the  election  of  certain  of  the  State  officers  and  certain 
members  of  the  State  legislature  in  that  year. 

' '  From  Minnesota  the  movement  spread  to  Iowa,  and 
there  is  no  contradiction  of  the  fact  that  the  railway 
employes'  vote  was  one  of  the  strongest  forces  in  the 
State  election  of  the  fall  of  1891.  It  also  overflowed  into 
Kansas,  Nebraska,  Missouri  and  Texas.  Had  the  election 
of  last  November  been  normal  it  is  probable  that  the 
efTect  of  the  Railway  Employes'  Club  vote  would  have 
been  as  visible  in  two  or  three  of  those  States  then  as  it 
had  been  in  Iowa  in  the  preceding  year.  But  in  the 
deluge  which  occurred  all  trace  of  the  smaller  streams 
and  currents  was  obliterated.  Had  the  members  of  the 
clubs  not  taken  the  precaution  to  do  considerable  work  in 
the  local  nominating  conventions  of  both  parties  they 
would  be  compelled  to  confess  that  their  campaign  of 
1892  was  a  failure.   ... 

"So  far  the  clubs  have  admitted  and  will  admit  of  no 
negotiations  with  the  State  committees  of  other  parties. 
They  hold  their  own  meetings  and  decide  for  themselves 
that  such  and  such  a  candidate  is  inimical  to  their  interests 
as  railway  employes,  and  such  and  such  a  man  is  their 
friend.     Then  they  go  to  the  polls  and  vote — voting  in  the 


Riiilr'nid   Liftrntun  —  Continiu >/.  !!11 


main  their  normal  part^^  ticket,  scratching  only  a  man  here 
and  a  man  there,  their  attention  being  chiefly  centered 
npon  members  of  tlie  hoards  of  raih'oad  commissioners  and 
-of  the  State  legislatnres. 

"  In  Minnesota  in  1S!)(J  their  weight  was  thrown  chiefly 
in  favor  of  Republicans.  In  Iowa  in  1891  it  was  given  to 
Democrats.  In  all  States  the  men  whom  they  oppose  are 
those  who  have  made  themselves  conspicuous  as  '  Granger  ' 
and  anti-railway  politicians.  The  keynote  of  tlie  move- 
ment and  the  one  plank  in  the  platform  of  the  clubs  is  that 
the  extreme  anti-railroad  legislation  of  late  years  has  re- 
duced the  earnings  of  the  companies  to  a  point  at  which 
they  are  unable  an}'  longer  to  keep  full  forces  oh  their  pay- 
rolls or  to  pay  such  wages  as  the}'  should,  and  that  by  this 
legislation  the  railway  emploj'es  are  necessaril}'  the  imme- 
diate sufferers.  .  .  . 

"A  railway  part}*  is  therefore  already  in  existence. 
.  .  .  And  moreover,  though  accidentally  onh',  it  is  working 
f0rcil)ly  in  behalf  of  railway  interests  as  a  whole.  ,  .  . 

"Meanwhile  Mr.  A.  F.  Walker,  the  chairman  of  the 
Joint  Committee  of  the  Trunk  Line  and  Central  Traffic 
Associations,  prophesies  that  if  things  go  on  as  they  are 
going  now,  before  long  '  the  managers  of  the  railways  will 
be  chiefly  receivers.'  In  the  year  1891  receivers  were 
appointed  for  twenty-six  companies  in  the  United  States, 
representing  $84,479,000  of  capital,  and  twenty-one  com- 
panies, with  3,223  miles  of  road,  with  a  capitalization  of 
$186,000,000.  w^ere  sold  under  foreclosure. 

"  It  is  doubtful  whether  the  result  which  Mr.  Walker 
foretells  would  be  regarded  as  a  calamity'  b}'  the  '  unim- 
formed  public  opinion  of  the  AVest. '  That  Minnesota 
railroad  commissioner  was  quite  sure  of  the  public  applause 
before  he  made  his  classic  declaration  that  he  proposed  to 
'  shake  the  railroads  over  hell '  before  he  had  done  with 
them,  and  the  Governor  of  Iowa,  who  announced  that 
he  did  not  care  if  'every  d — ^d  railroad  in  the  State  went 
into  bankruptcy'  befoi'e  the  expiration  of  his  term  of 
ofliice,  knew  that  the  sentiment  would  have  the  SN'mpathies 
of  his  constituents.  This  attitude  of  the  Westeihi  mind  is, 
of  course,  largely  explained  by  the  fact  that  the  people  of 


312  The  Railroad   Question. 

the  West  do  not  as  a  rule  own  railwa}'  securities.  In  two 
States  (the  only  two  in  the  West  in  which,  so  far  as  I  arq 
aware,  the  figures  have  been  compiled)  out  of  27,645 
stockholders  in  the  lines  within  the  State  borders  only  359 
are  residents  of  the  States.  If  the  other  27,286  were  also 
residents  of  these  States  (that  is  to  say,  if  27,286  of  the 
present  residents  were  also  stockholders  in  the  railways), 
it  is  probable  that  the  ferocity  of  the  public  opinion 
in  these  States  against  railways  wouJd  be  materially 
modified." 

It  is  evident  that  Mr.  Robinson  has  not  been  as  success- 
ful in  organizing  small  tradesmen,  boarding-house  keep- 
ers, employes  and  shareholders  into  a  new  party  as  he 
contemplated,  notwithstanding  ' '  it  was  at  no  loss  for  the 
sinews  of  war." 

He  attempts  to  show  that  this  movement  originated 
with  the  employes,  but  it  is  too  well  known  that  the  em- 
ployes who  organized  the  movement  were  under  pay  of 
the  railroad  companies  and  received  their  instructions 
from  the  railroad  managers.  The  statement  which  Mr. 
Robinson  attributes  to  the  Governor  of  Iowa  undoubt- 
edly originated  in  the  mind  of  one  who  is  laboring  to 
modify  the  ferocity  of  ' '  the  uninformed  public  opinion 
of  the  West."  No  Governor  of  Iowa  ever  made  any  such 
statement,  nor  ever  entertained  any  such  sentiment.  It  is 
a  sheer  fabi'ication. 

There  are  a  number  of  standard  text-books  of  law 
which  are  indispensable  to  the  student  of  railroad  ques- 
tions desiring  to  go  back  to  first  principles .  Only  a  few 
of  them  can  be  mentioned  here. 

I.  F.  Redfield,  in  his  "  Law  of  Railways,"  says  con- 
cerning the  necessity  for  railroad  supervision: 

' '  Railways  being  a  species  of  highway,  and  in  practice 
monopolizing  the  entire  traffic,  both  of  travel  and  trans- 
portation, in  the    country,   it  is   just  and  necessary  and 


Railroad  Literature. —  Continued.  313 


indispensable  to  the  public  security  that  a  strict  legisla- 
tive control  over  the  subject  should  be  constantly  exer- 
cised." 

Regarding  the  original  character  of  the  railway  as  a 
common  highway,  Redfleld  says: 

"  The  Railways  Clauses  Consolidation  Act  provides,  in 
detail,  for  the  use  of  railways  by  all  persons  who  may 
choose  to  put  carriages. thereon,  upon  the  payment  of  the 
tolls  demaudable,  subject  to  the  provisions  of  the  statute 
and  the  regulations  of  the  company.  The  view  originally 
taken  of  railways  in. England  evidently  was  to  treat  them 
as  a  common  highway,  open  to  all  wlio  might  choose  to 
put  carriages  thereon.  But  in  practice  it  is  found  neces- 
sary for  the  safety  of  the  traffic  that  it  should  be  exclu- 
sively under  the  control  of  the  company,  and  hence  no 
use  is,  in  fact,  made  of  the  railway  by  others. " 

As  to  the  questionable  financial  expedients  so  fre- 
quently resorted  to  in  building  American  railways,  this 
author  says: 

"This  is  not  the  place,  nor  are  we  disposed,  to  read  a 
homily  upon  the  wisdom  of  legislative  grants,  or  the 
moralities  of  moneyed  speculations  in  stocks  on  the  ex- 
change or  elsewhere.  But  it  would  seem  that  legislation 
upon  this  subject  should  be  conducted  with  sufficient 
deliberation  and  firmness  so  as  not  to  invest  such  incorpor- 
ations with  such  unlimited  powers  as  to  operate  as  a  net 
to  catch  the  unwary,  or  as  a  gulf  in  which  to  bury  out  of 
sight  the  most  disastrous  results  to  private  fortunes, 
which  has  justly  rendered  American  investments,  taken  as 
a  whole,  a  reproach  wherever  the  name  has  traveled. " 

The  opinion  is  expressed  in  this  work  that  under  certain 
circumstances  railroad  securities  should  be  aided  by  State 
credit,  and  is  supported  by  the  following  argument: 

' '  Here  we  have  no  national  funded  stock  in  convenient 
sums  for  small  investment,  and  which,  being  sure,  is 
really  a  great  blessing  to  the  mass  of  those  who  wish  to 
invest   moderate    sums  as   a   protection    against  age   or 


314  TIk'  Railroad    Question. 

calamity.  In  those  countries  where  such  opportunities 
exist,  it  removes  all  temptation  to  invest  small  sums  in 
these  enterprises,  which,  however  necessary  for  the  pub- 
lic, such  small  owners  can  but  poorly  afford  to  aid  in 
carrying  forward,  and  which  consequently  should  in  jus- 
tice either  be  guaranteed  or  owned  by  the  State,  or  at  all 
events  aided  by  State  credit,  when  they  become  indis- 
pensable for  the  public  convenience." 

Upon  the  subject  of  eminent  domain  Redfield  says  : 

' '  That  railways  are  but  improved  highways,  and  are  of 
such  public  use  as  to  justify  the  exercise  of  the  right  of 
eminent  domain,  by  the  sovereign,  in  their  construction, 
is  now  almost  universally  conceded." 

Kent  says  in  his  ' '  Commentaries  on  American  Law  " : 

"  The  right  of  eminent  domain,  or  inherent  sovereign 
power,  gives  to  the  legislature  the  control  of  private 
property  for  public  uses,  and  for  public  uses  only.  .  .  . 
So,  lands  adjoining  New  York  canals  were  made  liable  to 
l)e  assumed  for  the  public  use,  so  far  as  was  necessary 
for  the  great  object  of  the  canals.  ...  In  these  and  other 
instances  which  might  be  enumerated,  the  interest  of  the 
public  is  deemed  paramount  to  that  of  any  private  indi- 
vidual ;  and  yet,  even  here,  the  constitutions  of  the 
United  States  and  of  most  of  the  States  of  the  Union 
have  imposed  a  great  and  valuable  check  upon  the  exer- 
cise of  legislative  power,  l)y  declaring  that  private  prop- 
erty should  not  be  taken  for  public  use  without  just  com- 
pensation. ...  It  undoubtedly  must  rest,  as  a  general 
rule,  in  the  wisdom  of  the  legislature  to  determine  when 
public  uses  require  the  assumption  of  private  property  ; 
but  if  they  should  take  it  for  a  purpose  not  of  a  pub- 
lic nature,  as  if  the  legislature  should  take  the 
property  of  A  and  give  it  to  B,  or  if  they  should  vacate  a 
grant  of  property,  or  of  a  franchise,  under  the  pretext  of 
some  public  use  or  service,  such  cases  would  be  gross 
abuses  of  their  discretion,  and  fraudulent  attacks  on  pri- 
vate right,  and  the  law  would  clearly  be  unconstitutional 
and  void." 


Railroad  Literature — Continued.  315 


Concerning  the  construction  of  corporate  powers  Kent 
lays  down  the  following  rule  : 

' '  The  modern  doctrine  is  to  consider  corporations  as  hav- 
ing sncli  powers  as  are  specifically  granted  by  the  act  of 
incorporation,  or  as  are  necessary  for  the  purpose  of  car- 
rying into  etFect  the  powers  expi-essly  granted,  and  as 
having  no  other.  The  Supreme  Court  of  the  United  States 
declared  this  obvious  doctrine,  and  it  has  been  repeated  in 
the  decisions  of  the  State  courts.  No  rule  of  law  comes 
with  a  more  reasonable  application,  considering  how  lav- 
ishly charter  privileges  have  been  granted.  As  corpora- 
tions are  the  mere  creatures  of  law,  established  for  special 
purposes,  and  derive  all  their  powers  from  the  acts  creat- 
ing them,  it  is  perfectly  just  and  proper  that  they  should 
be  obliged  strictly  to  show  their  authority  for  the  business 
they  assume,  and  be  confined  in  their  operations  to  the 
mode  and  manner  and  subject  matter  prescribed." 

As  to  the  duties  of  common  carriers  he  says: 

"As  they  hol<l  themselves  to  the  world  as  common 
carriers  for  a  reasonable  compensation,  they  assume  to  do 
and  are  bound  to  do  what  is  required  of  them  in  the  course 
of  their  employment,  if  they  have  the  requisite  conven- 
ience to  carry  and  are  otTered  a  reasonable  and  customary 
price;  and  if  they  refuse  without  just  ground,  they  are 
liable  to  an  action. " 

Judge  Cooley,  in  his  very  able  work,  ' « Constitutional 
Limitations,"  refers  to  the  so-called  vested  rights  of  cor- 
porations and  the  abuse  growing  out  of  them  as  follows: 

< '  It  is  under  the  protection  of  the  decision  in  the  Dart- 
mouth College  case  that  the  most  enormous  and  threat- 
ening powers  in  our  country  have  been  created,  some  of 
the  great  and  wealthy  corporations  actually  having  greater 
influence  in  the  country  at  large,  and  upon  the  legislation 
of  the  country,  than  the  States  to  which  they  owe  their 
corporate  existence.  Every  privilege  granted  or  right 
conferred — no  matter  by  what  means  or  on  what  pretense 
— being  made  inviolable  by  the  Constitution,  the  Govern- 


316  T]ic    Railroad    Question. 

ment  is  frequently  found  stripped  of  its  autliority  in  very 
important  particulars,  by  unwise,  careless  or  corrupt  legis- 
lation; and  a  clause  of  the  Federal  Constitution  whose 
purpose  was  to  preclude  the  repudiation  of  debts  and  just 
contracts  protects  and  perpetuates  the  evil." 

The  late  President  Grarfleld,  in  one  '  of  his  legislative 
speeches,  called  attention  to  the  fact  that  Chief  Justice 
Marshall  pronounced  the  decision  in  the  Dartmouth  Col- 
lege case  ten  years  before  the  steam  railway  was  born,  and 
then  said : 

"I  have  ventured  to  criticise  the  judicial  application  of 
the  Dartmouth  College  case,  and  I  venture  the  further 
opinion  that  some  features  of  that  decision,  as  applied  to 
the  railway  and  similar  corporations,  must  give  way  under 
the  new  elements  which  time  has  added  to  the  problem." 

Charles  Fisk  Beach,  Jr.,  in  his  recent  work  entitled 
"Commentaries  on  the  Law  of  Private  Corporations," 
well  defines  what  constitutes  dedication  to  a  public  use. 
He  says: 

•' '  Whenever  any  person  pursues  a  public  calling  and 
sustains  such  relations  to  the  public  that  the  people  must 
of  necessit}^  deal  with  him,  and  are  under  a  moral  duress 
to  submit  to  his  terms  if  he  is  unrestrained  by  law,  then, 
in  order  to  prevent  extortion  and  an  abuse  of  his  position, 
the  price  he  may  charge  for  his  services  may  be  regulated 
by  law.  When  private  property  is  affected  with  a  public 
interest  it  ceases  to  he  juris  privati  only.  This  was  said 
by  Lord  Chief  Justice  Hale  more  than  three  hundred  years 
ago  in  his  treatise  Be  Portihus  Maris,  and  has  been 
accepted  without  objection  as  an  essential  element  in  the 
law  of  property  ever  since." 

Treating  of  the  fiduciary  position  of  directors  and  officers 
of  corporations,  the  same  author  says : 

"The  directors,  officers  and  agents  of  a  corporation  are 
held  to  the  general  rule  of  law  resting  '  upon  our  great 
moral  obligation  to  refrain  from  placing  ourselves  in  rela- 
tions which  ordinarily  excite  a  conflict  between  self-interest 


Railroad   Literature — Continued.  317 


and  integrity. '  Tlie  directors  and  officers  are  the  agents 
of  the  company,  and  while  acting  in  that  capacity  for  it 
cannot  detil  with  themselves  to  the  deti-imeiit  of  the  cor- 
poration. All  contracts  of  that  character  are  voidable  at 
the  option  of  the  corporation." 

And  further  he  says: 

' '  A  director  whose  personal  interests  are  adverse  to 
those  of  the  corporation  has  no  right  to  act  as  a  director. 
As  soon  as  he  finds  he  has  personal  interests  which  are  in 
conflict  with  those  of  the  company  he  ought  to  resign." 

T.  Carl  Spelling,  in  his  treatise  on  "The  Law  of  Pri- 
vate Corporations,"  saj^s  of  pooling  arrangements: 

"  Courts  long  ago  exercised  jurisdiction  to  regulate 
rates  of  quani  public  corporations,  and  on  the  same  prin- 
ciple will  refuse  to  enforce  pooling  contracts  between 
railroad  and  gas  companies.  Such  contracts  are  void  as 
against  public  policy.  .  .  .  There  ia  substantial 
harmony  between  the  Knglish  and  American  definitions  of 
monopoly,  the  two  countries  agreeing  that  contracts 
entered  into  by  and  between  two  or  more  corporations,  the 
necessary  result  of  whose  performance  will  crush  and 
destroy  competition,  are  illegal." 

Upon  the  subject  of  eminent  domain  Mr.  Spelling 
remarks : 

''  That  the  legislature  may  thus  select  any  agency  it 
sees  fit  for  the  exercise  of  eminent  domain,  and  also  that 
it  may  determine  what  purposes  shall  be  deemed  public, 
are  propositions  too  deeply  rooted  in  the  jurisprudence  of 
this  country  to  admit  now  of  doul)t  or  discussion. 
Making  an  application  of  this  doctrine  to  railway  opera- 
tions, conceding  it  to  be  settled  that  these  facilities  for 
travel  and  commerce  are  a  public  necessity',  if  the  legisla- 
ture, reflecting  the  public  sentiment,  decide  that  the 
general  benefit  is  better  promoted  by  their  construction 
through  individuals  or  corporations  than  by  the  State 
itself,  it  would  clearly  be  pressing  a  constitutional  maxim 
to  an  absurd  extreme  if  it  were  to  be  held  that  the  pul)lic 
necessity  should  be  only  provided  for  in  the  way  which  is 


318  The  Railroad  Question. 

least  consistent  with  tlie  public  interest.  .  .  .  The 
power  of  eminent  domain  being  an  inherent  element  of 
sovereignty,  it  cannot  be  divested  out  of  the  State  or 
abridged  by  contract  or  treaty  so  as  to  bind  future  legis- 
latures. Nor  can  the  riglit  be  divested  by  private 
contract." 

Concerning  State  control  of  corporations  the  same 
author  says: 

"The  subordination  of  all  private  interests  to  the  pur- 
poses of  government,  subject  only  to  the  condition  that 
the  object  to  be  accomplished  shall  be  one  in  which  the 
public  has  an  interest,  is  no  longer  an  open  question. 
In  its  general  bearing  this  principle  is  too  well  settled  and 
uniformly  recogni.zed — underlying  the  adjudications  by 
courts  of  all  cases  involving  constitutional  provisions — to 
require  more  than  a  mere  statement."' 

And  again  he  says: 

"Nor  is  it  longer  necessary  to  seek  a  justification  of 
the  common  practice  of  regulating  the  rates  of  charges 
and  general  management  of  railroads  on  the  ground  that 
they  have  received  valuable  franchises  of  a  public  nature 
and  had  important  powers  of  sovereign  character  con- 
ferred upon  them.  That  may  be  an  important  political 
consideration,  and  as  such  may  strengthen  the  argument 
in  favor  of  the  right;  Ijut  the  right  itself  rests  upon  firmer 
ground,  and  upon  other  considerations  thon  that  of 
pecuniary  consideration  derived  from  the  State.  The 
State  may  regulate  their  business,  not  because  they  are 
corporations,  nor  3'et  because  thc}^  are  corporations  of  a 
particular  kind,  but  because  they,  like  the  individuals  of 
which  they  are  composed,  are  subject  to  the  laws  which 
say  that  when  one  devotes  his  property  to  a  use  in  which 
the  public  has  an  interest,  he  in  effect  grants  to  the 
public  an  interest  in  that  use,  and  must  submit  to  be  con- 
trolled by  the  public  for  the  common  good  to  the  extent 
of  the  interest  he  has  thus  created." 


CHAPTER  XI. 

RAILROADS  AND  RAILROAD  LEOISLATION  IN  IOWA. 

THE  first  survey  for  a  railroad  in  tlie  State  of  Iowa  was 
made  in  the  fall  of  1852.  The  proposed  road  had  its 
initial  point  at  Davenport  and  followed  a  westerly  course. 
It  was  practically  an  extension  of  the  Chicago  and  Rock 
Island  Railroad,  which  was  then  being  built  between  Chi- 
cago and  the  Mississippi  River.  On  the  22d  day  of  Decem- 
ber, 1852,  the  Mississippi  and  Missouri  Railroad  Company 
was  formed,  its  object  being  to  build,  maintain  and  operate 
a  railroad  from  Davenport  to  Council  Bluff's.  The  articles 
of  association  were  acknowledged  before  John  F.  Dillon, 
notary  public,  and  filed  for  record  in  the  office  of  the 
Recorder  of  Scott  County,  on  the  26th  of  January,  1853, 
and  in  the  office  of  the  Secretaiy  of  State  on  the  first  day 
of  February  following.  In  1853  the  Mississippi  and  Mis- 
souri Railroad  Company  entered  into  an  agreement  with 
the  Railroad  Bridge  Company  of  Illinois  for  the  construc- 
tion and  maintenance  of  a  bridge  over  the  Mississippi  at 
Rock  Island.  The  work  was  commenced  in  the  fall  of 
that  year,  and  the  bridge  was  completed  on  April  21, 
1856,  it  being  then  the  only  bridge  spanning  the  Missis- 
sippi River.  The  first  division  of  the  Mississippi  and 
Missouri  Railroad,  extending  from  Davenport  to  Iowa 
City,  was  completed  on  the  first  of  January,  1856,  and 
was  formally  opened  two  days  later.  A  branch  line  to 
jMuscatine  was  completed  shortly  thereafter.  On  the  first 
day  of  July  the  State  of  Iowa  had  in  all  sixty-seven  miles 
of  railroad,  bonded  at  $14,925  a  mile,  which  at  that  time 

319 


320  The  Railroad    Question. 


probably  represented  the  total  cost  of  construction.  The 
earnings  of  these  sixt^'-seven  miles  of  road  during  the  six 
months  following  July  1,  1856,  amounted  to  $184,193, 
or  $2,749  per  mile,  which  was  equal  to  au  annual  income 
of  about  $5,500  per  mile. 

On  the  15  th  of  May,  1856,  Congress  granted  to  the 
State  of  Iowa  certain  lands  for  the  purpose  of  ' '  aiding  in 
the  construction  of  raih'oads  from  Burlington,  on  the 
Mississippi  River,  to  a  point  on  the  Missouri  River  near 
the  mouth  of  the  Platte  River  ;  from  the  city  of  Daven- 
port, Iowa,  by  way  of  Iowa  City  and  Fort  Des  Moines,  to 
Council  Bluffs;  from  Lyons  City  northwesterly  to  a 
point  of  intersection  with  the  main  line  of  the  Iowa  Cen- 
tral Air  Line  Railroad  near  Maquoketa,  thence  on  said 
line  running  as  near  as  practical  to  the  forty-second  parallel 
across  the  State  ;  and  from  the  city  of  Dubuque  to  the 
Missouri  River  near  Sioux  City. "  The  grant  comprised 
the  alternate  sections  designated  by  odd  numb^s  and 
l3ing  within  six  miles  from  each  of  the  proposed  roads. 
Provision  was  also  made  for  indemnity  for  all  lands  cov- 
ered by  the  grant  which  were  already  sold  or  otherwise 
disposed  of. 

The  wisdom  of  the  land-grant  policy  has  been  ques- 
tioned. When  these  grants  were  made  it  was  believed  by 
many  that  railroads  would  not  and  could  not  be  built  in 
the  West  without  such  aid.  While  others  did  not  share 
this  opinion,  they  at  least  supposed  that  land  grants 
would  greatly  stimulate  railroad  enterprise  and  lead  to 
the  early  construction  of  the  lines  thus  favored. 

The  land  grant  of  the  Mississippi  and  Missouri  Railroad 
was  a  mere  donation  for  that  part  of  the  line  which  was 
ali'eady  completed  at  the  time  the  grant  was  made  ;  and 
the  extension  of  this  line,  as  well  as  the  construction  of 


Railroads  and  Railroad  Legislation  in  Iowa.      321 

the  other  Imes  to  which  the  grant  applied,  was  not  made 
as  fast  as  had  been  anticipated.  The  price  of  all  Gov- 
ernment lauds  lying  outside  of  the  land-grant  belts  was 
$1.25  per  acre.  To  reimburse  the  public  treasury  for 
the  loss  resulting  from  these  grants,  the  price  of  lands 
situated  within  the  land-grant  belts  was  advanced  to  $2. 50 
per  acre,  practically  compelling  the  purchasers  of  the 
even-numbered  sections  of  land,  instead  of  the  Govern- 
ment, to  make  the  donation  to  the  railroads,  it  being 
supposed  that  the  benefits  resulting  to  those  regions  from 
the  immediate  construction  of  railroads  would  corre- 
spondingly enhance  the  value  of  the  alternate  sections  of 
land  reserved  by  the  Government.  Designing  men  soon 
saw  the  advantages  which  the  situation  offered.  They 
combined  with  their  friends  to  organize  companies  for 
the  construction  of  the  land-grant  roads,  built  a  small 
portion  of  the  proposed  line,  to  hold  the  grant,  and  then 
awaited  further  developments,  or  rather  the  settlement  of 
the  country  beyond.  There  are  those  who  believe  that 
the  doubling  of  the  price  of  Government  land  within  the 
belt  of  the  proposed  land-grant  roads  greatly  retarded 
immigration  and  with  it  the  construction  of  roads.  They 
hold  that,  had  no  grant  whatever  been  made  to  any  rail- 
road company  and  had  equal  competition  in  railroad  con- 
struction been  permitted,  the  Iowa  through  lines,  instead 
of  following,  would  have  led,  the  tide  of  immigration. 

It  has  been  seen  that  in  1856  the  Mississippi  and  Mis- 
souri Railroad  was  completed  as  far  as  Iowa  City.  On  the 
second  day  of  June  of  that  year  its  Board  of  Directors 
asked  the  Governor  of  the  State  to  convene  the  General 
Assembly  in  extra  session,  to  consider  the  disposition 
which  should  be  made  of  the  recent  Congressional  grant. 
This  urgency  might  lead  one  to  suppose  that  the  company 


322  Tlic   Railroad   Question. 

was  anxious  to  extend  its  line  at  the  earliest  opportunity. 
The  (xeneral  Assembl}^  was  convened,  and  the  land  given 
to  the  State  by  Congress  for  the  purpose  of  aiding  in  the 
construction  of  a  railroad  from  Davenport  to  Council 
Bluffs  was  given  to  the  Mississippi  and  Missouri  Railroad 
Company.  The  act  was  approved  by  the  Governor  on  July 
14.  1856,  and  three  days  later  the  company  "  assented  to 
and  accepted  the  grant."  It  then  executed  mortgage 
after  mortgage,  and  ])uilt  a  branch  line  through  quite  a 
populous  territor}',  from  Muscatine  to  Washington,  but 
the  main  line  made  very  slow  progress.  In  1865  the 
bonded  debt  of  the  company  amounted  to  $6,851,754, 
although  the  line  was  completed  only  to  Kellogg,  in  Jas- 
per County,  al)Out  forty  miles  east  of  Des  Moines.  In 
spite  of  the  fact  that  the  cost  of  operating  the  road  had 
from  the  beginning  varied  but  little  from  60  per  cent,  of 
its  gross  receipts,  its  pi'esident,  in  a  circular  letter  to  the 
stock-  and  bondholders,  dated  October  20th,  1865,  made 
the  statement  that  the  company  was  ' '  driven  to  the  neces- 
sity of  selling  the  road  or  reorganizing."  In  1866  suit 
was  brought  in  the  Circuit  Court  of  the  United  States  for 
the  District  of  Iowa  for  the  foreclosure  of  the  company's 
mortgages,  and  a  decree  of  foreclosure  was  entered  on  the 
1 1  th  day  of  May  of  that  year.  The  property  was  sold  on  the 
9th  day  of  July  following  at  Davenport,  and  was  pur- 
chased by  the  Chicago,  Rock  Island  and  Pacific  Railroad 
Cornpany,  which  was  incorporated  in  this  State  a  few 
weeks  previous  to  the  sale,  for  the  purpose  of  acquiring 
the  railroads  built  by  the  Mississippi  and  Missouri  Rail- 
road Company  with  all  its  appurtenant  property,  "  and  all 
the  rights,  privileges  and  franchises  granted  by  the  act  of 
Congress  of  May  15th,  1856,  to  the  State  of  Iowa,  and  by 
the  State  of  Iowa  granted  to  the  said  Mississippi  and  Mis- 


Rail  nx  I  (la  <in<J  Rdi/raad  Lr(fis/(ifiini  in  Joira.       Wl'i 

souri  Railroad  Compan}',  and  when  so  acquired  to  maintain 
and  operate  the  said  railroad. "  It  is  a  significant  fact  tliat 
all  the  corporators  of  the  new  company,  except  one,  were 
directors  of  the  bankrupt  company.  On  the  20th  of 
August,  1866,  the  Chicago,  Rock  Island  and  Pacific  Com- 
pany of  the  State  of  Iowa  consolidated  with  the  Chicago, 
Rock  Island  and  Pacific  Railroad  Company  of  Illinois, 
and  conve3'ed  all  its  property,  powers  and  franchises  to 
the  consolidated  compan3^  The  validity  ol;  the  consolida- 
tion was  questioned  by  a  large  number  of  stock-  and  bond- 
holders, and  the  courts  were  appealed  to  to  issue  injunc- 
tions restraining  the  consolidated  company  from  extending 
its  line  or  expending  any  money  obtained  through  the  sale 
of  its  securities.  In  this  predicament  the  company  turned 
to  the  Iowa  legislature  for  protection.  Anxious  to  secure 
the  early  completion  of  the  road,  the  Twelfth  General 
Assembly,  by  an  act  approved  February  11th,  1868, 
recognized  the  consolidated  company,  and  resumed  and 
granted  to  it  "all  right  or  interest"  which  the  State  had 
in  the  lands  previously  granted  to  the  Mississippi  and 
Missouri  Railroad  Company.  The  act  expressly  provided, 
however,  that  the  Chicago,  Rock  Island  and  Pacific  Railway 
Company  should  ' '  at  all  times  be  subject  to  such  rules, 
regulations  and  rates  of  tariff  for  transportation  of  freight 
and  passengers  as  may  from  time  to  time  be  enacted  and  pro- 
vided for  by  the  General  Assembly  of  the  State  of  Iowa," 
and  that  if  the  company  should  neglect  to  compl}^  with 
any  of  the  requirements  of  the  act,  it  should  forfeit  to  the 
State  all  its  franchises  and  corporate  rights  acquired  by  or 
under  the  laws  of  the  State,  and  ail  lands  granted  to  ai(l 
in  the  construction  of  its  road.  The  line  was  completed  to 
Council  Bluffs  in  June,  1869. 

The  lands  in  aid  of  the  construction  of  a  railroad  run- 
ning across  the  State,  as  nearly  as  practicable  along  the 


324  Tlie   Railroad  Qnestiun. 

forty-second  parallel,  were  granted  by  the  General 
Assembl}'  to  the  Iowa  Central  Air  Line  on  the  14th  of 
July,  185G,  but  as  this  company  failed  to  fulfill  the  con- 
ditions of  its  grant,  it  was,  on  the  17th  of  March,  1860, 
transferred  to  the  Cedar  Rapids  and  Missouri  Iliver  Rail- 
road Company.  This  company  completed  the  road  to 
Marshalltown  in  1862,  to  Nevada  in  1864,  to  Boone  in 
.1865,  and  to  Council  Bluffs  in  the  fall  of  1867. 

The  Burlington  and  Missouri  River  road  reached  the 
Missouri  River  but  a  few  months  later.  Ten  j^ears  after 
this  company  had  received  its  grant,  its  line  had  only 
been  completed  as  far  as  Albia,  in  Monroe  County.  In 
1867  the  road  was  built  little  more  than  half  across  the 
State.  But  it  managed  not  to  be  far  behind  its  two  rivals 
on  the  north  in  reaching  the  Missouri  River. 

At  first  sight  it  might  seem  as  if  these  companies  had 
all  at  once  become  awake  to  their  obligations.  When  it  is 
remembered,  however,  that  in  1869  the  junction  of  the 
Union  Pacific  and  Central  Pacific  railroads  was  effected, 
and  thus  a  continuous  line  across  the  continent  formed, 
the  conclusion  lies  near  that  the  haste  with  which  the 
three  Iowa  land-grant  roads  were  completed  was  simply 
the  result  of  a  strife  for  the  large  amount  of  through  busi- 
ness which  the  completion  of  the  Pacific  route  promised  to 
bring  to  them. 

No  such  inducement  existed  for  the  Dubuque  and  Sioux 
City  Company,  and  twelve  years  after  receiving  its  grant 
it  had  not  yet  built  half  of  its  line.  In  his  message  to  the 
Twelfth  General  Assembly,  delivered  January  14,  1868, 
Governor  Stone  said :  ' '  Under  the  provisions  of  the  act 
adopted  by  the  General  Assembly,  at  its  extra  session  (in 
July,  1856),  this  (the  Dubuque  and  Sioux  City)  company 
became  the  beneficiary  of  the  grant  designed  to  secure  the 


Rdilroadu  aiid  Railroad  Legislation  in  Iowa.       325 

construction  of  a  railroad  leading  from  Dubuque  to  Sioux 
City,  and  this  valuable  donation  was  accepted  from  the 
State,  with  all  the  terms  and  conditions  imposed.  A  large 
portion  of  this  grant  has  already  been  absorbed  by  the 
company,  in  various  ways,  by  pretended  sales  and  incum- 
brances. This  road  has  been  constructed  to  Iowa  Falls,  a 
distance  of  143  miles  from  Dubuque,  but  I  am  unable  to 
discover  any  reliable  evidence  of  earnest  intention  on  the 
part  of  this  company  to  construct  the  line  to  its  terminal 
point  on  the  Missouri  River." 

The  Governor  further  recommended  that  the  General 
Assembly  pass  an  act  resuming  the  control  over  these 
lands.  At  about  the  same  time  an  agreement  was 
effected  between  the  Iowa  Falls  and  Sioux  City  Railroad 
Company  (which  was  organized  in  the  fall  of  1867)  and 
the  Dubuque  and  Sioux  City  Railroad  Company,  by  which 
the  latter  transferred  to  the  former  its  land  grant  for  the 
unfinished  portion  of  the  Dubuque  and  Sioux  City  road. 
This  agreement  was  confirmed  by  the  General  Assembly, 
through  an  act  approved  April  7,  1868.  The  road  was 
completed  to  Fort  Dodge  in  August,  1869,  and  to  Sioux 
City  a  year  or  two  later.  The  entire  line  was  then  leased 
to  the  Illinois  Central. 

The  land  grant  to  this  line  of  road  embraced  over 
1,000,000  acres  of  the  finest  lands  of  the  State.  We  can 
appreciate  the  magnitude  of  this  donation  when  we  con- 
sider that,  had  these  lands  been  sold  at  only  18  per  acre, 
the  proceeds  would  have  paid  the  whole  expense  of  build- 
ing and  e(|uipping  the  road  from  Dubuque  to  Sioux  City. 
The  lands  granted  to  the  C. ,  R.  I.  &  P.  R.  R.  were  sold 
at  an  average  price  of  over  $8  per  acre,  and  those  of  the 
B.  &  M.  at  over  $12  per  acre. 

Among  the  other  important  land  grants  is  that  made 
to  the  ^McGregor  Western  Railroad  Compnny.      This  coiVi- 


326  The   RdiJnxtd   QiKstion. 

pany  was  the  successor  of  the  McGregor,  St.  Peters  and 
3Iissouri  River  Railroad  Company,  which  was  organized 
in  1857  for  the  purpose  of  constructing  a  railroad  from 
'  McGregor  to  the  Missouri  River.  The  construction  of  the 
road  was  commenced  in  1857  at  McGregor.  Large  local 
subscriptions  were  taken  along  the  proposed  line,  the 
writer  being  one  of  the  subscribers.  Work  was  con- 
tinued the  next  year  until  much  of  the  heavy  grading 
had  been  done,  when  the  road  was  allowed  to  go  through 
the  process  of  foreclosure,  like  many  other  roads  built  in 
the  West  at  that  time.  The  old  stock  was  completely 
wiped  out,  and  new  owners  came  into  possession  of  the 
property,  reorganizing  under  the  name  of  the  McGregor 
Western  Railway  Company.  Nearly  all  the  early  invest- 
ments of  Iowa  people  were  thus  confiscated  by  the  same 
class  of  men  who  now  cry  out  loudly  against  confiscatory 
measures.  By  an  act  of  Congress  approved  May  12, 
1864,  the  State  of  Iowa  was  granted,  for  the  use  and 
benefit  of  the  McGregor  Western  Railroad  Company, 
every  alternate  section  of  land  designated  by  odd  num- 
bers for  ten  sections  in  width  on  each  side  of  the  pro- 
posed road.  The  act  contained  the  condition  that  in  the 
event  of  the  failure  of  said  McGregor  Western  Railroad 
Company  to  build  twenty  miles  of  said  road  during  each 
and  every  year  from  the  date  of  its  acceptance  of  the  grant 
the  State  might  resume  the  grant  and  so  dispose  of  it  as 
to  secure  the  completion  of  the  road  in  question.  The 
McGregor  Western  Railroad  Company  failing  to  comply 
with  the  conditions  of  the  grant,  the  General  Assembly 
on  the  27th  day  of  February,  1868,  resumed  the  lauds 
and  on  the  31st  day  of  March  of  the  same  year  regranted 
them  to  the  McGregor  and  Sioux  City  Railway  Company. 
The  act  specially  provided  ttia.t  the  company  accepting 


Railroads  and  Railroad  Legislation  in  Iowa.      327 

the  grant  "shall  at  all  times  be  subject  to  such  rules, 
regulations  and  rates  of  tariff  for  the  transportation  of 
freight  and  passengers  as  may  from  time  to  time  be 
enacted  and  provided  for  by  the  Greneral  Assembly  of  the 
State  of  Iowa,  and  further  suV)ject  to  the  conditions, 
limitations,  restrictions  and  provisions  contained  in  this 
act  and  in  the  acts  of  Congress  granting  said  lands  to 
the  State  of  Iowa."  It  also  contained  the  condition  that  at 
least  twenty  miles  of  road  should  be  built  by  the  company 
every  j'ear  and  that  the  whole  road  should  be  completed 
to  the  intersection  of  the  then  proposed  railway  from 
Sioux  City  to  the  Minnesota  State  line  b}'  the  first  daj''  of 
December,  1875. 

The  McGregor  and  Sioux  City  Railway  Company  also 
failing  to  comply  with  the  terms  of  the  grant,  the  lands 
were  again  resumed  by  the  General  Assembly  on  March 
15th,  1876,  and  regranted  to  the  McGregor  and  Missouri 
River  Railroad  Company  upon  the  condition  that  it  com- 
plete the  road  to  the  intersection  of  the  Sioux  City  and 
St.  Paul  Railroad  on  or  before  the  first  day  of  December, 
1877. 

But  the  State  found  itself  again  disappointed,  and  two 
years  later  the  General  x\ssembly  for  the  third  and  last 
time  resumed  its  grant  and  then  conferred  it  upon  the 
Chicago,  Milwaukee  and  St.  Paul  Railway  Company  upon 
the  express  conditions  that  it  complete  the  road  to  Spencer 
on  or  before  the  first  day  of  January,  1879,  and  to 
Sheldon  within  a  year  thereafter,  and  that  the  road  should 
at  all  times  be  suliject  to  State  control.  The  road  was 
completed  to  Sheldon  without  delay,  and  on  the  30th  of 
November,  1878,  the  Governor  of  the  State  certified  to 
the  Secretary  of  the  Interior  that  the  Chicago,  Milwaukee 
and  St.  Paul  Railway  Company  had  completed  its  road 


32&  Hie  Railroad  Question. 


from  Algona  to  Sheldon  in  compliance  with  the  conditions 
of  the  original  grant  and  the  laws  of  the  State. 

It  thus  took  over  twenty  years  to  complete  this  road. 
Ten  years  after  its  construction  had  commenced  it  had 
only  reached  Calmar  in  AVinneshiek  County.  In  1869  the 
road  was  completed  to  Clear  Lake  and  in  1870  to  Algona. 
This  point  remained  its  terminus  until  it  passed  into  the 
hands  of  the  Chicago,  Milwaukee  and  St.  Paul  Railway 
Company. 

The  State  of  Iowa  has  not  derived  that  benefit  from 
the  large  land  grants  made  to  its  railroads  which  her 
people  had  a  right  to  expect.  In  spite  of  these  grants 
roads  were  built  only  when  there  was  reason  to  believe 
that  they  would  be  immediately  profitable  to  their  owners. 
The  laud  grants  enriched  the  promoters  of  these  enter- 
prises much  more  than  they  did  the  State  in  whose 
interest  the  grants  were  presumed  to  be  made.  As  a 
rule  they  enabled  scheming  men  to  hold  the  selected 
territor}^  until  a  railroad  through  it  promised  to  be  a  safe 
and  profitable  investment,  and  to  avoid  the  payment  of 
taxes  on  their  millions  of  acres  of  land,  which  in  the 
meantime  became  very  valuable.  Other  roads  were  built 
at  an  early  day  without  Government  aid.  They  were 
pushed  forward  by  the  current  of  immigration  until  the 
threatened  competition  of  roads  favored  by  these  grants 
checked  their  progress.  The  Chicago,  Iowa  and  Nebraska 
road  may  be  cited  as  a  fair  illustration.  It  was  projected 
on  the  26th  of  January,  1856,  in  the  town  of  Clinton,  to 
be  built  from  Clinton  to  the  Missouri  River  via  Cedar 
Rapids.  It  was  opened  to  De  Witt  in  1858  and  com- 
pleted to  Cedar  Rapids  the  following  year.  The  road  was 
82|^  miles  long  and  was  built  entirely  with  private  means, 
receiving  neither  legislative  aid  nor  local  subsidy.     It  is 


Railroads  and  Railroad  Legislation  in  loica.       329 

more  than  probable  that  this  road  would  at  an  early  day 
have  been  completed  to  the  Missouri  River,  had  it  not 
feared  the  rivalry  of  the  subsidized  Cedar  Rapids  and 
Missouri  road. 

The  total  number  of  acres  of  land  granted  by  Congress 
to  aid  the  construction  of  Iowa  roads  is  4,069,942.  A 
fair  idea  of  the  value  of  these  lands  may  be  obtained 
from  the  fact  that  the  Chicago,  Rock  Island  and  Pacific 
Railroad  Corapan}'  sold  over  half  a  million  acres  of  its 
lands  at  an  average  of  $8.68  per  acre,  and  the  Chicago 
Burlington  and  Quincy  sold  nearly  350,000  acres  at  an 
average  of  $12.17  per  acre. 

But  land  grants  form  only  a  small  part  of  the  pul)lic 
and  private  donations  which  have  been  made  to  Iowa 
roads.  Including  the  railroad  taxes  voted  by  counties, 
townships  and  municipalities,  the  grants  of  rights  of 
way  and  depot  sites  and  public  and  private  gifts  in 
money,  these  roads  have  received  subsidies  amounting  to 
more  than  $50,000,000,  or  enough  to  build  40  percent, 
of  all  the  roads  of  the  State.  There  is  no  doubt  that  the 
contributions  of  the  public  toward  the  construction  of  the 
railroads  of  Iowa  is  several  times  as  large  as  the  actual 
contributions  of  their  stockholders  for  that  pui'pose. 

The  people  of  Iowa  were  from  the  first  very  favorably 
disposed  towards  railroads.  P]very  inducement  was  held 
out  to  railroad  builders  to  come  here  and  help  to  multiply 
the  tracks  for  the  iron  horse.  They  came  and  brought 
with  them  many  abuses  which  since  the  first  introduction 
of  railroads  had  gradually  been  developed  in  other  States. 

The  contrast  between  the  old  and  the  new  mode  of 
transportation  was  so  great,  and  the  public  appreciated 
so  highly  the  superior  conveniences  afl'orded  by  the  latter, 
that  for  years  the  abuses  practiced  b}^  the  early  railroads 


330  The  Railroad  Question. 

were  scarce!}'  noticed,  or,  if  they  did  attract  the  attention 
of  the  public,  they  appeared  more  like  necessary  features 
of  the  new  system  of  transportation  than  like  abuses. 
The  evil  gradually  increased,  but  for  years  no  attempt 
was  made  to  check  its  growth.  The  railroad  managers 
construed  this  failure  of  the  people  to  interfere  with,  or 
even  protest  against,  their  unjust  practices  as  a  quasi- 
sanction  of  their  course,  and  soon  claimed  to  do  by  right 
what  they  had  formerly  done  by  sufferance.  The  evils 
increased  until  the  patience  of  the  people  finally  became 
exhausted. 

While  the  State  thus  for  years  dealt  very  Icnientl}'  with 
the  railroad  companies,  the  laws  of  Iowa  had  from  the 
beginning  of  railroad  building  emphasized  the  principle 
of  State  control.  This  principle  was  asserted  in  the  very 
first  railroad  act  ever  passed  in  the  State.  Section  14  of 
chapter  I.  of  the  acts  of  the  extra  session  of  the  Fifth 
General  Assembly,  regranting  to  the  various  railroad 
companies  the  lands  granted  to  the  State  by  Congress  for 
<rgiilroad  pjirposes,  provides  that  "railroad  companies 
accepting  the  provisions  of  this  act  shall  at  all  times  be 
subject  to  such  rules  and  regulations  as  may  from  time  to 
time  be  enacted  and  provided  for  by  the  General  Assem- 
bl}'  of  Iowa.  ..."  In  1866  an  attempt  was  made  in  the 
General  Assembly  to  regulate  rates,  but  the  Attorney- 
General,  to  whom  the  question  of  constitutionality  was 
submitted,  held  in  his  opinion  that  it  was  not  in  the 
power  of  the  legislature  to  prescribe  rates  for  railroad 
companies.  Tills  opinion  provoked  much  indignation 
among  the  peoi)le  of  the  State,  and  led  to  the  expression 
of  a  sound  public  opinion  by  legislative  acts  which  could 
not  be  misunderstood. 

When  the  Twelfth  General  Assembly  (in  1868) 
regranted  to  the  Chicago,  Hock  Island  and  Pacific  Rail- 


RalJronds  and  Railroad  Legislation  in  Iowa.       331 

road  Company  the  lands  originally  granted  to  the  Missis- 
sippi and  Missouri  Compan}-,  it  only  did  so  upon  the  con- 
dition that  ' '  said  railroad  company,  accepting  the  pro- 
visions of  this  act,  shall  at  all  times  be  subject  to  such 
rules,  regulations  and  rates  of  tariff  for  transportation  of 
freight  and  passengers  as  may  from  time  to  time  be 
enacted  and  provided  for  b}'  the  General  Assembly  of 
the  State  of  Iowa.  ..."  The  same  restricting  clause, 
known  as  the  Doud  Amendment,  was  added  to  all  other 
land  grant  acts  passed  by  the  Twelfth  and  subsequent 
General  Assemblies,  and  the  various  companies  willingly 
and  gladly  accepted  it. 

The  abuses  of  which  the  people  of  Iowa  complained 
were  far  from  being  confined  to  their  State.  They  were 
practiced  throughout  the  Northwest,  and  the  demand  for 
reform  was  as  loud  in  Minnesota,  Wisconsin  and  Illinois 
as  it  was  in  Iowa.  In  1871  laws  were  passed  in  Illinois 
and  Minnesota  fixing  maximum  charges  for  the  trans- 
portation of  freight  and  passengers  and  prohibiting  dis- 
criminations. The  railroads  claimed  that  a  State  did  not 
Im^e  the  right  to  prescribe  rates  and  refused  to  be  bound 
b^these  laws.  Instead  of  modifying  their  policy,  they 
became  daily  more  arrogant.  Discriminations  which  had 
before  been  practiced  under  the  veil  of  secrecy,  or  which 
had  been  defended  by  railroad  managers  as  exceptions  to 
the  general  rule  made  necessary  by  a  peculiar  combina- 
tion of  circumstances  whollj'  beyond  their  control,  were 
now  openly  and  defiantly  practiced  b}'  several  of  the 
larger  roads.  The  Chicago,  Milwaukee  and  St.  Paul 
Railroad  Company,  in  its  effort  to  annihilate  a  rival,  went 
so  far  as  to  openly  announce  to  the  pul^lic  its  intention  t(; 
entirely  disregard  distance  as  a  factor  in  rate-making.  It 
gradually  became  the  general  rule  to  wage  war  against 


332  The  Railroad  Question. 


rivals  a't  competitive  points  and  to  *' recoup"  by 
charging  excessive  rates  at  non-competitive  points. 
Every  encouragement  was  thus  given  by  the  railroads  to 
the  Granger  movement,  which  spread  in  less  than  two 
years  over  the  whole  Northwest. 

In  the  fall  of  1873  Iowa  elected  a  Granger  legislature, 
like  Minnesota,  Wisconsin  and  Illinois.  The  wildest  pre- 
dictions were  made  bj'  railroad  men  as  to  the  extremes  to 
which  the  Granger  legislature  would  go,  but  it  confined 
itself  to  enacting  a  law  establishing  an  official  classifica- 
tion and  fixing  maximum  rates  for  all  railroad  companies. 
The  law  was  approved  March  23,  1874,  and  went  into 
effect  on  the  4th  of  Jul}'  following.  This  law  in  no  case 
compelled  companies  to  carry  freight  at  a  lower  rate  than 
they  had  voluntaril}^  carried  it  in  the  past.  Many  of  the 
rates  in  force  at  the  time  of  the  passage  of  the  act  were 
considerably  lower  than  the  corresponding  maximum 
rates  fixed  by  the  legislature.  The  average  rates  fixed  by 
:^e  law  were  higher  than  the  rates  at  which  the  railroads 
had  previously  carried  a  large  portion  of  corresponding 
freight.  The  revenues  of  the  road  were  not  even  cur- 
tailed by  this  law;  on  the  contrary,  by  equalizing  rates, 
i.  e. ,  by  leveling  up  the  rates  given  to  favored  places  and 
favored  individuals  and  leveling  down  the  exorbitant 
rates  exacted  from  the  public  at  non-competitive  points, 
the  railroad  companies  were  enabled  to  effect  an  increase 
in  their  total  revenue. 

The  Granger  law  remained  in  force  until  1878.  Its 
constitutionality  was  tested  b}'  tlTe  railroad  companies  in 
the  Supreme  (^ourt  of  the  United  States,  but  this  high 
tribunal  held  that  rate-making  was  a  legislative  and  not  a 
judicial  function,  that  it  was  within  the  province  of  the 
State  legislature  to  prescribe  rates  for  the  transportation 


Railroads  and  Railroad  Legislation  in  Iowa.      333 

of  passengers  and  freight  wholly  within  the  State,  and 
that  for  protection  against  abuses  by  legislatures  the 
people  must  resort  to  the  polls,  and  not  to  the  courts. 

The  Granger  laws  have  been  and  are  still  severely  criti- 
cised by  those  opposed  to  the  principle  of  State  control 
and  by  the  ignorant.  It  is  nevertheless  true  that  those 
laws  were  moderate,  just  and  reasonably  well  adapted  to 
remedy  the  evils  of  which  the  public  complained.  It  has 
been  the  policy  of  most  railroad  men  to  attack  them  as 
crude,  intensely  radical  and  socialistic.  The  obloquy 
heaped  upon  them  was  the  work  of  designing  men  who 
desired  to  continue  their  impositions  upon  the  people. 
Mr.  Charles  Francis  Adams,  however,  admits  that  the 
Granger  method  was  probably  as  good  a  method  as  could 
have  been  devised  of  approaching  men  who  had  thorough- 
ly got  it  into  their  heads  that  they,  as  common  carriers, 
were  in  no  way  bound  to  afford  equal  facilities  to  all, 
and,  indeed,  that  it  was  in  the  last  degree  absurd  and 
unreasonable  to  expect  them  to  do  so. 

The  Iowa  law  was  imperfect  in  detail,  and  yet  its  en- 
actment proved  one  of  the  greatest  legislative  achieve- 
ments in  the  history  of  the  State.  It  demonstrated  to  the 
people  their  ability  to  correct  by  earnestness  and  perse- 
verance the  most  far-reaching  public  abuses  and  led  to  an 
emphatic  judicial  declaration  of  the  common-law  princi- 
ple that  railroads  are  highways  and  as  such  are  subject 
to  any  legislative  control  which  may  be  deemed  necessary 
for  the  public  welfare. 

Defeated  in  the  courts,  the  railroad  managers  now  en- 
deavored to  make  odious  the  new  law  which  deprived  them 
of  the  power  to  manipulate  railroad  interests  to  their  per- 
sonal advantage.  By  complying  with  only  part  of  its  let- 
ter and  none  of  its  spirit,    they  contrived  to  create  hard- 


334  Tlip  Railroad  Question. 


ships  for  certain  interests  and  localities.  Instead  of 
charging  in  all  cases  reasonable  rates,  as  the  spirit  of  the 
law  demanded,  thej^  would  frequentl}'  charge  the  maxi- 
mum rates  permitted  under  the  law,  and  when  they  by 
this  practice  suooeeded  in  damaging  certain  interests, 
they  would  point  to  the  Granger  law  as  the  source  of  all 
existing  railroad  evils.  So,  likewise,  when  they  were 
asked  by  their  patrons  to  reduce  a  high  rate,  they  would 
plead  the  legislative  schedule  in  excuse  of  their  failure  to 
comply  with  the  request.  When  the  legislature  of  1878 
convened,  the  railroad  managers  appeared  before  it  and 
pleaded  submissively  for  a  repeal  of  the  Granger  law  and 
the  establishment  of  a  commissioner  s^'stem.  They 
claimed  that  they  were  ready  and  willing  to  submit  to  all 
reasonable  regulation,  but  that  a  maximum  tariff  law  was 
prejudicial  both  to  the  best  interests  of  the  roads  and 
those  of  the  public.  They  further  asserted  that  the  peo- 
ple had  grown  tired  of  this  manner  of  regulating  railroad 
charges  and  earuestl}'  desired  a  change  of  policy;  that  the 
interference  of  the  State  with  the  railroad  business  had 
injuriously  affected  certain  industrial  interests  and  had 
greatly  retarded  railroad  construction  by  driving  capital 
and  promoters  of  railroad  enterprises  from  the  State. 
These  statements  would  indeed  have  argued  strongly  in 
favor  of  a  repeal  of  the  law  if  they  had  been  based  on 
facts.  There  had  been,  however,  no  expression  of  public 
dissatisfaction  during  the  campaign  preceding  the  session 
of  the  General  Assembly.  There  were  doubtless  indivi- 
duals and  even  communities  to  whom  the  law  had  been 
made  so  odious  that  the)''  felt  they  had  but  little  to  lose 
b)'  a  change,  but  the  masses  of  the  people  believed  that 
the  law  was  based  upon  just  principles  and  desired  its 
perfection  rather  than  its  'repeal.      As  to  the  claim  that 


R<(iJ iikkIs  <iud  RdHiddd  Leghhitioti  la  lowat      335 


railroad  construction  had  been  checked  by  hostile  legisla- 
tion, statistics  prove  that  during  the  five  3'ears  following 
the  great  panic  of  1873  Iowa  fared  no  worse  hi  this  respect 
than  her  sister  States  east,  west  or  south. 

The  arguments  produced  by  the  railroad  managers  no 
doubt  influenced  some  members  of  the  General  Assembly; 
by  far  the  greater  number  of  them,  however,  realized  that 
the  failure  of  the  law  to  bring  the  expected  relief  was  not 
due  so  much  to  its  (3wn  imperfections  as  to  the  absence  of 
a  power  to  enforce  it.  The  writer,  with  others,  was  con- 
vinced that  a  strong  and  conscientious  commission  would 
be  a  much  more  potent  agency  to  secure  reasonable  rates 
for  the  shipper  than  a  maximum  tariff  law  without  proper 
provisions  for  its  efficient  enforcement;  they,  in  short, 
preferred  a  commission  without  a  tariff  law  to  a  tariff  law 
without  a  commission.  The  question  became  the  subject  of 
many  animated  debates  in  both  houses  of  the  General  As- 
sembly, but  the  commissioner  system  at  last  prevailed.  The 
act  establishing  a  Board  of  Railroad  Commissioners,  and 
defining  their  duties,  was  approved  on  the  23rd  of  March, 
1878,  and  went  into  force  a  few  days  later.  The  act  em- 
powered the  commission  to  exercise  a  general  supervision 
over  all  railroads  operated  in  the  State,  to  inquire  into  any 
neglect  or  violation  of  the  laws  of  the  State  by  any  rail- 
road corporation  or  its  officers  or  employes,  to  examine 
the  books  and  documents  of  any  corporation,  to  investi- 
gate complaints  of  shippers  that  unreasonable  charges 
had  been  made  by  railroad  companies,  and  to  modify  any 
charge  which  they  might  deem  unreasonable.  It  was  also 
made  the  commissioners'  duty  to  make  an  annual  report  to 
the  Governor  disclosing  the  working  of  the  railroad  sys- 
tem in  the  State,  the  officers  of  each  company  being  re- 
quired to  make  annual  returns  to  the  board  for  this 
purpose. 


336  The  Railroad  Question. 


Though  the  enactment  of  this  law  was  a  surprise  to  the 
people,  they  accepted  it  in  good  cheer,  and  determined  to 
give  it  an  honest  trial.  The  law  was  extensive  in  its  scope 
and  stringent  for  that  time,  and,  if  strictly  enforced  in 
letter  and  in  spirit,  promised  to  be,  and  would  have  been , 
entirely  sufficient  for  the  thorough  control  of  railroad 
corporations. 

Nevertheless,  in  the  course  of  time  it  became  apparent 
that  either  the  law  had  not  lodged  sufficient  authority  in 
the  commission  or  the  commission  did  not  make  use  of 
the  authority  which  the  law  had  given  them.  In  spite  of 
the  commission,  the  railroad  companies  maintained  pools 
and  charged  extortionate  and  discriminating  rates,  in 
direct  violation  of  the  law.  It  is  true  the  commissioners 
righted  many  a  wrong.  In  investigating  the  complaints 
of  shippers  against  railroad  companies  they  often  rendered 
valuable  services  to  those  who  had  neither  the  means  nor 
the  inclination  to  prosecute  their  rights  in  the  courts  of 
law;  but  as  they  held  that  they  couldLonljLpass.iipon  indi- 
vidual charges,  and  did  not  have  the  power  to  revise  the 
companies'  tariffs,  tlie  companies  were  virtually  in  a  posi- 
tion to  become  guilty  of  more  extortions  in  one  day  than 
the  commission  could  investigate  in  a  year.  Moreover, 
the  railroad  gompan}^  might  be  ordered  I)}'  the  commission 
to  return  an  overcharge  to  a  certain  shipper,  but  this  did 
not  prevent  it  from  continuing  the  excessive  charge.  If 
the  overcharged  shipper  again  wanted  relief  it  was  his 
privilege  to  again  apply  to  the  commission,  and  to  con- 
tinue this  tedious  process  until  either  his  or  the  commis- 
sioners' patience  became  exhausted.  The  people  soon 
found  that  the  new  system  of  control  was  almost  as  inade- 
quate as  that  which  it  had  displaced.  Some  attributed 
the  weakness  of  the  commission  to  its  personnel,  others  to 


Railroads  and  Railroad  Legislation  in  Jotca.      337 


the  law.      The£fi_Js  no  doubt  tliut  the  commission  might 
have  accomplished  more  than  it  did. 

It  was  hoped  by  some  that  as  tlie  commission  gained  in 
experience  it  would  gain  iu  influence,  and  that  rail- 
road evils  would  gradually  diminish.  But  they  were  dis- 
appointed in  their  expectations.  Every  year  seemed  to 
add  to  the  grievances  of  the  public.  Success  greatly  em- 
boldened the  railway  companies.  Discriminations  seemed 
to  increase  in  number  and  gravity.  At  many  points  in 
the  western  part  of  the  State  freight  rates  to  Chicago  were 
from  50  to  75  per  cent,  higher  than  from  points  in  Kansas 
and  Nebraska.  A  car  of  wheat  hauled  only  across  the 
State  paid  twice  as  much  freight  as  another  hauled  twice 
the  distance  from  its  point  of  origin  to  Chicago.  3Iinne- 
sota  flour  was  hauled  a  distance  of  300  miles  for  a  less 
rate  than  Iowa  flour  w^as  carried  100  miles.  Certain 
merchants  received  from  the  railroad  companies  a  discount 
of  50  per  cent,  on  all  their  freights  and  were  thus  enabled 
to  undersell  all  their  competitors.  The  rate  on  coal  in 
carload  lots  from  Cleveland,  Lucas  County,  to  Glenwood 
was  $1.80  per  ton,  and  from  the  same  point  to  Council 
Bluffs  only  $1.25,  although  the  latter  was  about  thirty 
miles  longer  haul.  Innumerable  cases  of  this  kind  could 
be  cited.  There  was  not  a  town  or  interest  in  the  State 
that  did  not  feel  the  influence  of  these  unjust  practices. 
Many  of  the  rates  complained  against,  it  is  true,  were 
beyond  the  direct  control  of  the  State  commission,  but 
there  was  an  impression  among  well-informed  shippers 
that  if  the  commission  had  the  power  to  fix  local  rates  and 
exercised  it  judiciously,  the  railroad  companies  would  soon 
find  it  to  their  interest  to  be  as  reasonable  in  making 
through  rates  for  lowans  as  they  expected  the  commis- 
sion to  be  in  prescribing  local  tariffs. 


338  Tito   Rail  mad  Question. 


The  demaiid^  of  the  people  for  more  equitable  rates  and 
a  more  thorough  control  of  the  railroad  business  increased 
from  j'ear  to  j-ear.  Repeated  attempts  were  made  in  the 
General  Assembly  to  secure  the  passage  of  an  act  looking 
to  that  end,  but,  owing  to  shrewd  manipulations  on  the 
part  of  the  railroad  lobb}',  ever}'  attempt  was  defeated. 
There  always  was,  of  course,  a  large  number  of  members 
who  represented  districts  not  well  supplied  with  railroad 
facilities.  These,  as  a  rule,  honestly  opposed  restrictive 
legislation,  believing  'that  such  legislation  would  check 
building,  and  that,  on  the  other  hand,  competition  could 
be  relied  upon  to  correct  abuses.  Of  those  members  who 
had  less  positive  convictions  manj'  were  retained  as  rail- 
road attorneys  and  were  thus  made  serviceable  to  the 
companies.  Other  members  with  political  ambition  were 
flattered  or  intimidated  into  subjection,  and  bribes  in  dis- 
guise, such  as  passes  and  special  rates,  were  not  unfre- 
quently  resorted  to  to  strengthen  the  railroad  following  in 
both  houses  of  the  Greneral  Assembly-. 

Railroad  corruption  did  not  pause  here.  It  is  a  notor- 
ious fact  that  large  sums  of  money  were  paid  to  venal 
papers  of  both  parties  in  consideration  of  an  agreement 
on  their  part  to  defend  transportation  abuses  and  exert 
their  influence  against  progressive  railroad  legislation. 
The  vilest  means  were  often  resorted  to  b}'  these  sheets  to 
obtain  their  end.  Public  men  who  had  the  courage  to 
avow  their  opposition  to  existing  railroad  abuses  or  to 
favor  a  more  perfect  system  of  State  control  of  railways 
were  misrepresented,  ridiculed,  traduced  and  denounced 
as  demagogues  and  socialists  by  hypocritical  editors,  who 
prostituted  their  political  influence  as  long  as  they  enjoyed 
railroad  stipends,  and  who  at  intervals  became  converts 
to  the  cause  of  the  people  for  the  purpose  of  extorting 


Railroads  and  Jiailnnid  Lcgislatlow  la  Iowa.      339 


from  the  railroad  compani(>s  a  new  and  increased  subsidy. 
But  trutli  can  not  long  he  suppressed.  The  masses  of 
the  people  may  l>e  imposed  upon  for  a  time,  but  even  the 
shrewdest  rogue  will  eventually  l)e  compelled  to  surren- 
der. In  time  even  rather  luisophisticated  voters  learned 
to  place  a  true  estimate  upon  the  motives  of  the  editors, 
whose  policy,  as  one  of  them  expressed  it  in  the  author's 
presence,  was  "controlled  by  the  counting-room.' 

Railroad  politicians  gradually  lost  their  influence,  and 
the  symptoms  of  public  discontent  greatly  increased.  In 
thQ^j3olitical  campaign  of  1887  State  control  of  railroads 
became  oift  of  the  main  issues.  Both  of  the  great  politi- 
cal  parties  in  their  platforms  had  declared  themselves 
very  emphatically  in  favor  of  such  legislation  as  would 
bring  railroad  corporations  under  complete  State  control, 
and  with  very  few  exceptions  the  various  legislative  dis- 
tricts had  nominated  only  such  men  as  candidates  for  leg- 
islative offices  as  were  known  to  be  in  thorough  accord 
with  the  masses  of  the  people  upon  the  railroad  question. 

The  election  resulted. in. uneven  more  complete  defeat 
of  the  railroad  forces  than  had  been  generall}'  anticipated. 
Yet  no  hasty  step  w^as  taken  when  the  General  Asseml)l}'' 
convened.  A  large  number  of  bills  contemplating  rail- 
road reforms  in  various  ways  were  introduced,  but  the 
material  presented  was  carefully  sifted  by  the  railroad 
committees  and  a  committee  bill  was  framed  which  incor- 
porated the  best  features  of  them  all.  The  committees 
listened  patiently  for  weeks  to  the  arguments  of  the  rep- 
resentatives of  l)oth  the  railroads  and  the  shippei's. 

Never  before  had  so  formidable  a  railroad  lobby  assem- 
bled at  the  State  Capitol.  The  danger  signal  had  been 
raised,  and  not  only  were  the  great  political  manipulators  of 
the  State  called  into  requisition,  but  experts  from  adjoining 


340  The  Railroad   Question. 


States  joined  them  in  besieging  tlie  legislature.  The 
dogs  of  war  were  let  loose  from  all  quarters.  A  legion  of 
hirelings  were  zealous  to  show  their  servility  and  loyalty 
to  their  lords.  Tlie  daily  and  weekly  papers  of  the  State 
in  the  service  of  railroad  companies  teemed  witli  argu- 
ments from  the  pens  of  railroad  attorneys,  and  their 
columns  were  profusely  supplemented  with  editorials 
copied  from  prominent  corporation  papers  like  the  New 
York  7^/'t6;(«Y',  New  York  Times,  New  York  World,  Albany 
Evening  Argus,  Boston  Advertiser,  and  others  from  various 
parts  of  the  country. 

These  papers,  attempting  to  disguise  the  motives  that 
prompted  them  to  come  to  the  defense  of  the  Wall  Street 
interest,  affected  the  position  of  disinterested  and  impar- 
tial observers.  They  condemned  the  proposed  measures 
as  wild  and  socialistic,  and  they  painted  in  dark  colors 
the  disasters  to  railroad  property,  the  injustice  to  its 
owners,  and  misfortunes  to  the  people  of  Iowa,  that  would 
follow  their  adoption.  Especially  did  they  bewail  the  losses 
that  would  fall  upon  the  widows  and  orphans  who  had 
confidingly  invested  all  of  their  hard  earnings  in  this 
property . 

They  never  uttered  a  word  of  condemnation,  but  en- 
tirely ignored  or  defended  the  abuses  by  which  the  stock- 
holders were  robbed  at  one  end  of  the  line  and  the  natrons 
were  imposed  on  at  the  other. 

Many  of  these  papers  were  notified  that  their  state- 
ments were  altogether  erroneous,  but  they  would  not 
admit  a  line  to  their  columns  in  relation  to  the  matter 
that  indicated  an}'  other  disposition  than  complete  sub- 
serviency to  the  interests  of  ^Vall  Street. 

There  were,  however,  an  unusual  numlier  of  strong 
men  in  this  Gleneral  Assembly,    and  this    extraordinary 


R((il roiuh  (Uid  lldilroad  Lrcjislaflon  in   loini.       341 

display  of  railroad  forces  only  tended  to  impress  more 
strongly  upon  them  the  necessity  of  curbing  the  railroad 
power,  and  their  best  energies  were  concentrated  upon 
the  subject,  with  a  firm  determination  to  deal  with  it  in  a 
manner  dictated  by  reason  and  experience. 

So  well  did  the  bill  which  was  finally  adopted  by  the 
committee  reflect  the  general  sentiment  of  the  members 
of  the  Gr-eneral  Assembly  that  not  a  single  vote  was  cast 
against  it  in  either  house  upon  its  final  passage.  Since 
the  adjustment  of  business  under  this  law,  there  has  been 
less  friction  between  the  people  and  the  railroads  than 
before  for  thirty  years,  and  so  satisfactory  has  it  proved 
to  all  that  no  one,  not  even  a  railroad  man,  has  to  this 
day  asked  the  legislature  to  repeal  the  law  or  any  part  of 
it.  The  act  contains  no  new  principle  of  railroad  con- 
trol. B}'  far  the  greater  part  of  its  provisions  were  taken 
from  the  old. law.  Nearly  every  one  of  its  features  may 
be  found  either  in  the  Interstate  Commerce  Act  or  upon 
the  statute  books  of  other  States.  It  provides  that 
charges  must  be  reasonable  and  just,  that  no  undue 
preference  or  advantage  shall  be  given  to  an}'^  railroad 
patron,  and  that  equal  facilities  for  interchange  of  traffic 
shall  be  given  to  all  roads;  it  prohibits  pooling,  a  greater 
charge  for  a  shorter  than  longer  haul,  the  shorter  or  any 
portion  of  it  being  included  in  the  longer,  and  discrimina- 
tion against  any  shipping  point.  It  requires  that  sched- 
ules of  rates  and  fares  shall  be  printed  and  kept  for 
public  inspection,  and  that  no  advance  shall  be  made  in 
raTes"  or  fares  once  established  except  after  ten  da3-s' 
public  notice;  and  it  empowers  the  Board  of  Railroad 
Commissioners  to  make  and  revise  schedules  for  railroads, 
the  rates  contained  in  such  schedules  to  be  received  and 
held  in    all    suits  as  prima  faeio    reasonable    maximum 


342  The  Railroad  Question. 

rates.      The  act  further  provides  penalties  and  means  of 
enforcement. 

Is  must  not  be  supposed  that  ]>y  the  passage  of  this 
act  the  legislature  disclaimed  the  right  to  fix  absolute 
rates;  it  simpi}'  chose  this  expedient  because  in  the  pres- 
ent tentative  stage  of  rate  regulation  it  seemed  most 
efficisnt. 

There  has  been  much  misunderstanding  concerning  the 
Iowa  law.  Many  suppose  that  the  Iowa  commissioners 
have  power  to  make  confiscatory  rates  for  the  railroads, 
while  in  fact  they  can  only  name  maximum  rates  which 
shall  be  deemed  and  taken  in  all  courts  of  the  State  as 
jjrhna  facie  evidence  that  they  arj  reasonable  and  just 
maximum  rates  until  the  railroads  show  that  they  are  not. 
They  are  at  liberty  to  go  into  court  any  day  and  show 
this,  if  they  are  able.  They  are,  however,  careful  not  to 
undertake  it,  for  no  one  knows  better  than  they  do  that 
the  rates  fixed  b}'  the  commissioners  are  liberal  for  the 
railroads. 

There  are  nine  States,  besides  Iowa,  in  which  the  power 
to  fix  rates  has  been  conferred  upon  railroad  commis- 
sioners. This  feature  of  the  law  was  therefore  far  from 
being  a  novel  one,  yet  noprovision  of  the  act  was,  pre- 
vious to  its  passage,  so  furiously  opposed,  or  subsequent 
to  it  so  stubbornly  resisted  as  this.  Railroad  managers 
realized  that  a  surrender  of  the  right  to  make  their  own 
rates  was  virtually  a  surrender  of  the  power  to  practice 
abuses. 

Soon  after  the  passage  of  the  law  the  commissioners 
commenced  the  workof  preparing  schedules  of  the  rates 
'forthe  roads.  They  endeavored  to  do  justice  to  both  the 
railroad  companies  and  their  patrons  by  affording  a  fair 
compensation  to  the  former  and  at  the  same  time  giving 


Railroads  and  Railroad  Legislation  In  loioa.      843 

relief  to  the  depressed  interests  represented  b}'  the  latter 
Their  rates  were  not  as  low  as  the  special  rates  that 
had  at  various  times  been  granted  to  favorite  shippers, 
but  were  a  fair  average  of  the  various  rates  in  vogue  at 
the  time.  While  the  schedule  was  under  consideration, 
the  railroad  managers  were  given  frequent  hearings,  in 
which  they  endeavored  to  impress  their  views  upon  the 
commissioners  and  to  obtain  many  important  concessions, 
which  they  urged  as  essential  to  the  welfare  of  the  rail- 
road interests.  Their  views  guided  the  commission  to 
such  an  extent  that  it  was  generally  supposed  that  the 
schedule  as  finally  adopted  would  be  accepted  by  the  rail- 
road companies  without  protest. 

The  schedule  of  the  Iowa  commission  has  been  sharply 
criticised  by  Mr.  Stickney  in  his  "  Railway  Problem. "  He 
finds  in  it  inconsistencies  and  confusion,  due,  as  he 
charges,  to  faulty  mathematics.  But  it  is  claimed  by  the 
commission,  and  Mr.  Stickney  should  know,  that  whenever 
mathematics  were  ignored  in  th^^  construction  of  the  sched- 
ule it  was  done  at  the  earnest'  and  persistent  solicitation 
of  the  railroad  managers,  who,  it  seems,  were  more  inter- 
ested in  maintaining  their  interstate  rates  than  in  the  con- 
sistency of  the  Iowa  schedule. 

The  rates  were  published,  as  required  by  law,  and  June 
28,  1888,  was  fixed  as  the  day  on  which  the}^  wei-e  to  take 
effect.  A  few  days  previous  to  this  date  the  companies 
asked  that  the  taking  effect  of  the  new  tariff  be  postponed 
a  week.  When  this  request  was  granted  by  the  chairman 
of  the  commission,  the  railroad  managers  took  advantage 
of  the  courtesy  by  enjoining  the  commissioners  in  the 
Federal  court  from  enforcing  it. 

Several  months  later  the  commissioners  modified  their 
schedule  by  the  adoption  of  the  Western  Classification. 


344  The  Railroad   Question. 

Again  the  railroad  managers  asked  the  court  for  an  injimc- 
tion,  but  this  time  met  with  a  refusal. 

After  many  suits  for  penalties  had  been  instituted 
against  them,  and  many  more  threatened,  they  adopted 
the  new  schedule,  but  endeavored  to  inaugurate  a  policy 
of  retaliation  hy  reducing  their  train  service  and  discharg- 
ing a  large  number  of  employes,  and  in  many  ingenious 
ways  continued  their  seditious  course  with  a  determination 
characteristic  of  a  band  of  insurrectionists.  But  the  im- 
petus which  railroad  traffic  received  under  the  operation 
of  the  commissioners'  schedule  was  such  that  they  soon 
found  it  necessary  to  restore  to  the  service  its  former 
efficiency. 

The  Railroad  Commissioners'  report  shows  that  while 
the  number  of  employes  was  24,642,  and  their  yearly 
compensation  was  $14,212,500  in  1889,  in  1892  there 
were  30,492  employes,  and  their  yearly  compensation 
$18,070,915. 

The  increase  in  both  the  gross  and  net  earnings  of  Iowa 
lines  has  been  remarkable,  as  shown  in  the  following  table 
gathered  from  the  commissioners'  reports: 


Gross  Earnings, 

Net  Earnings, 

Year. 

Total. 

Total. 

Per  Mile . 

1888-89  . 

. . .  $37,369,276  . . 

.  .  $11,861,310  .. 

..  $1,421 

1889-90  . 

. ..     41,318,133  .. 

.  .     12,798,430  .. 

..     1,522 

1890-91  . 

. ..     43,102,399  .. 

. .     14.463,106  .. 

. .     1,720 

1891-93  . 

.  ..     44,540,000  .. 

. .     14,945,000  .. 

. .     1,777 

It  was  claimed  by  railroad  men  that  the  effect  of  Iowa 
legislation  would  be  particularly  disastrous  to  her  local 
roads,  which  had  no  opportunity  to  make  up  on  through 
business  the  losses  incurred  in  the  local  traffic.  The  Burl- 
ington, Cedar  Rapids  and  Northern  was  particularly  cited 
as  a  line  which  would  have  to  go  into  bankruptcy  under 
the  new  law.     Its  earnings  commenced  to  increase,  how- 


Rdilnnid.s  and  Rntlroad  Leginlafion  in  Iowa.      345 

ever,  immediately  after  the  adoption  of  the  commission- 
ers' schedule,  and  at  the  end  of  the  first  year  they  were 
large  enough  to  change  this  line  from  a  Class  "  C  "  to  a 
Class  ''  B  "  road.  They  continued  to  increase,  and  in  1891 
its  gross  earnings  on  substantially  the  same  mileage  were 
36  per  cent,  and  its  net  earnings  64  per  cent,  larger  than 
they  had  been  in  1888.  The  increase  continued  and  en- 
abled the  company  to  "make  a  dividend  to  its  stockholders 
February  1,  1893,  it  being  the  first  dividend  ever  made 
by  the  company.  It  is  a  good  illustration  of  what  the 
Iowa  law  has  done  for  weak  railroads.  It  has  again 
changed  class  and  is  now  a  Class  "A"  road. 

It  is  seen  that  the  fears,  or  rather  the  pretended  fears 
of  the  railroad  managers,  that  the  legislature  of  Iowa 
would  bankrupt  her  railroads,  were  entirely  groundless. 
As  a  result  of  the  law  railroads  have  been  able  to  increase 
their  gross  earnings  as  well  as  their  profits.  They  have 
been  enabled  to  give  employment  to  a  larger  number  of 
men,  and  there  has  been  no  occasion  for  them  to  carry  out 
the  dishonest  threat  to  decrease  the  wages  of  their  em- 
ployes. Had  it  not  been  for  their  increased  earnings  in 
Iowa,  the  losses  recently  sustained  in  other  States  by 
several  of  the  through  lines  would  have  made  it  impossi- 
ble for  them  to  declare  the  dividends  which  they  did. 

Under  her  beneficial  railroad  policy  Iowa  has  prospered 
wonderfully,  and  her  railroads  have  been  more  prosperous 
than  when  they  were  allowed  to  have  their  own  way.  The 
commissioners'  tariff  has  made  jobbing  and  manufacturing 
profitable  where  it  was  unprofitable  before.  It  has  added 
to  our  industries  and  our  commerce,  and  has  made  new 
business  for  the  people  as  well  as  the  railroads.  It  has  con- 
tributed to  the  increase  in  the  value  of  our  farms  and 
factories  and   their   products,   and    the  time    will    come 


346  Tlie   Railroad  Question. 

when  wise  railroiwl  managers,  like  the  majority  of  former 
slaveholders  of  the  South,  would  not  resurrect  the  past  if 
they  could.  In  fact,  honorable  managers  now  acknowl- 
edge that  they  would  not  if  they  could. 

The  railroad  companies  are  at  present  making  a  .syste- 
matic effort  to  weaken  the  Iowa  commission,  but  if  they 
should  succeed  in  doing  so.  the  people,  under  our  system 
of  electing  the  commissioners,  can  readily  correct  the 
evil . 

Other  States  have  much  experience  similar  to  that  of 
Iowa.  Nebraska  has  just  adopted  a  maximum  tariff  law 
for  the  control  of  her  roads.  It  will,  of  course,  be  re- 
sisted by  the  railroad  managers  of  that  State. 

The  State  of  Texas  is  not  so  productive  in  proportion, 
but  is  much  greater  in  extent  than  Iowa,  and  upon  the 
whole  resembles  it  much  in  its  prominent  characteristics. 
Both  are  thrifty,  progressive  States,  with  no  large  com- 
mercial or  manufacturing  centers  where  their  people  can 
easily  organize  to  protect  their  financial  interests. 

The  people  of  Texas  endured  patiently  the  abuses  so 
prevalent  in  railroad  management  until  a  few  years  since 
they  enacted  a  railroad  law  similar  to  that  of  Iowa.  The 
Wall  Street  managers  of  the  Texas  I'ailroads  are  at  the 
present  time  using  all  of  their  familiar  methods  to  in- 
fluence the  people  of  that  State  to  repeal  their  law.  The 
following  letter  serves  to  show  the  spirit  with  which  they 

are  approached: 

"  23  Broad  Street, 
"New  York,   November  30,  1891. 
' '  James  B.  Simpson,  Esq. ,  Dallas,  Tex. 

"  Dear  Sir:  Yours  of  the  26th  is  received  and  contents 
carefully  noted.  Very  likely  you  have  valuable  franchises, 
or  what  would  be  valuable  in  almost  any  other  State  than 
Texas ;  but  while  their  are   many  places  in  Texas   where 


Railroads  and  Railroad  Legislation  in  Iowa.      347 

■\ve  would  like  to  l)uil(l  some  railroads — mostly  short  ones 
— we  cannot  do  anything  so  long  as  the  disposition  exists 
that  now  seems  to  in  Texas;  that  is,  to  do  all  the  harm 
they  can  do  this  kind  of  property,  and  I  think  my  views 
are  shared  by  all  people  avIio  have  money  to  invest.  No 
one  is  disposed  to  create  property  which,  after  being 
created,  is  not  to  be  controlled  by  its  ownership.  Of 
course,  we  all  expect  to  be  subject  to  the  police  regula- 
tions and  to  pay  the  taxes  of  any  State  even  as  other 
property,  but  whenever  anything  is  done  beyond  that  it 
checks  this  kind  of  improvement,  and  where  it  approaches 
so  near  confiscation  as  the  sentiment  of  Texas  tends  it 
entirely  prevents  capital  from  being  invested. 

' '  I  think  there  is  no  road  in  Texas  that  is  to-day  earn- 
ing its  operating  and  fixed  charges.  Every  road,  I  think, 
has  been  or  is  in  the  hands  of  a  receiver,  excepting  our 
great  east  and  west  line,  which  is  supported  by  business 
going  entirely  through  the  State,  which  business  could 
also  bo  sent  another  way,  and  would  be  so  sent,  excepting 
that  we  believe  the  people  of  Texas  will  some  time  take  a 
sober  second  thought  and  treat  the  railroads  as  they  do 
other  kinds  of  property.  When  that  time  comes  I  shall 
be  ready  to  talk  to  you  about  your  franchises,  if  it  comes 
in  my  day,  and  I  believe  it  will,  as  I  think  no  other  people 
are  suffering  from  an  unwise  policy  persistently  pursued 
as  are  the  people  of  your  State. 

'■ '  Yours  truly, 

"  C.   P.   Huntington." 
"  Now,  in  the  name  of  all  the  g^ods  at  once. 

Upon  what  meat  doth  this  our  Csesar  feed, 

That  he  hath  grown  so  great?  " 

It  was  but  a  few  years  ago  when  this  Mr.  Huntington 
was  keeping  a  small  retail  store  in  the  city  of  Sacramento, 
and  he  exhibited  then  no  greater  ability,  except  perhaps 
that  he  was  a  little  more  venturesome,  than  thousands  of 
others  engaged  in  the  same  occupation;  subsequently  he 
engaged,  with  sevei-al  others,  in  the  Central  Pacific  Kail- 
road  scheme,  and  received  from  the  bounties  of  our  gen- 


348  The  Railroad  Question. 

erous  Grovernment  as  his  share  of  the  profits  in  that  enter- 
prise several  million  dollars,  which  sum  has  ever  since 
been  continually  swelled  by  the  exercise  of  a  power 
scarcely  inferior  to  the  power  of  taxing  the  property  of 
the  Pacific  Coast.  He  has  been  so  successful  for  years  in 
manipulating  Congressmen  and  State  legislatures  and 
shaping  the  policies  of  States  that  he  now  considers  it 
impertinent  and  short-sighted  for  a  people  to  take  steps 
to  limit  his  levies  upon  them.  It  is  to  be  hoped  that  the 
boycotting  and  intimidating  methods  resorted  to  will  have 
no  more  effect  upon  the  people  of  that  State  than  they 
had  on  the  people  of  Iowa. 

Iowa  is  the  queen  among  the  States  of  the  Union.  No 
other  State  has  so  little  waste  land  or  is  so  productive. 
Her  annual  output  of  staple  products  amounts  to  hun- 
dreds of  millions  of  dollars  in  value.  Her  people  are  in- 
telligent, progressive  and  just.  None  are  governed  more 
by  the  precepts  of  the  golden  rule,  or  are  more  disposed 
to  render  unto  Caesar  the  things  that  are  Caesar's.  She 
can  well  be  proud  of  the  progress  she  has  made  in  State 
control  of  railroads.      Let  no  backward  step  be  taken. 


CIIAPTKR  XII. 

TlIE    INTERSTA'l'E    COMMERCE  ACT. 

THE  Constitution  of  tin;  United  States  was  adopted 
nearly  fifty  years  before  the  locomotive  made  its 
appearance.  Had  the  steam  railroad  been  in  existence  in 
1787  and  been  as  important  an  agency  of  commerce  as  it 
is  to-daj'  there  is  every  reason  to  believe  that  the  rail- 
road question  would  have  received  the  special  attention  of 
the  framers  of  that  instrument.  It  is  a  well-known  fact 
that  the  'new  and  more  perfect  government"  had  its 
origin  in  the  necessities  of  commerce,  and  while  the 
future  exigencies  of  trade  were  beyond  the  roach  of  the 
most  speculative  mind,  the  provisions  of  the  Constitution 
relating  to  the  subject  of  interstate  commerce  were  made 
broad  and  far-reaching.  Section  8  of  Article  I.  of  the 
Constitution  provides  that  ' '  the  Congress  shall  have 
power  ....  to  regulate  commerce  with  foreign  nations, 
and  among  the  several  States,  and  with  the  Indian  tribes 
.  .  .  .and  to  make  all  laws  which  shall  be  necessary  and 
proper  for  carrying  into  execution  the  foregoing  powers 
and  all  other  powers  vested  by  this  Constitution  in  the 
Government  of  the  United  States,  or  in  any  department 
or  oflficer  thereof." 

If  any  doulit  ever  existed  as  to  the  import  of  the  phrase 
"to  regulate  commerce,"  it  has  been  entirely  removed  by 
the  decisions  of  the  Supreme  Court.  In  the  Passenger 
cases,  7  Howard,  416,  the  court  said: 

"Commerce  consists  in  selling  the  superfluity;  in  pur- 
chasing articles  of  necessity,  as  well  productions  as  man- 
ufactures ;  in    buying    from    one    nation    and   selling  to 

349 


350  Tlie  Railroad    Question. 

another,  or  in  transporting  the  merchandise  from  the  seller 
to  the  buyer  to  gain  the  freight." 

And  again,  in  the  Philadelpliia  and  Reading  Railroad 
vs.    Pennsylvania,  the  Supreme  Court  said; 

"Beyond  all  question  the  transportation  of  freights  or 
of  the  subjects  of  commerce  for  the  purpose  of  exchange 
or  sale  is  a  constituent  of  commerce  itself.  This  has 
never  been  doubted,  and  probably  the  transportation  of 
articles  of  trade  from  one  State  to  another  was  the 
prominent  idea  in  the  minds  of  the  framers  of  the  Consti- 
tution when  to  Congress  was  committed  the  power  to 
regulate  cammerce  among  the  several  States.  ...  It  would 
be  absurd  to  suppose  that  the  transmission  of  the  sub- 
jects of  trade  from  the  seller  to  the  buyer,  or  from  the 
place  of  production  to  market,  was  not  contemplated,  for 
without  that  there  could  be  no  consummated  trade  with 
foreign  nations  or  among  the  States." 

Chief  Justice  Marshall,  in  Gibbons  vs.  Ogden,  9  Whea- 
ten,  196,  construed  the  words  "power  to  regulate"  as 
follows: 

"  This  power,  like  all  others  vested  in  Congress,  is  com- 
plete in  itself,  may  be  exercised  to  its  utmost  extent,  and 
acknowledges  no  limitations  other  than  are  prescribed  in 
the  Constitution." 

It  is  a  strange  fact  that  during  the  tirst  eighty  j'ears  of 
the  Government's  existence  Congress  did  not  exert  its 
power  to  regulate  the  conduct  of  common  carriers  engaged 
in  interstate  transportation.  The  first  act  regulating  such 
carriers  was  passed  in  3\x\y,  1866.  It  authorized  railroad 
companies  chartered  by  the  States  to  carry  passengers, 
freights,  etc.,  "on  their  way  from  any  State  to  another 
State,  and  to  receive  compensation  therefor,  and  to  con- 
nect with  roads  of  other  States  so  as  to  form  continuous 
lines  for  transportation  of  the  same  to  the  place  of  desti- 
nation."  The  passage  of  this  act,  it  should  be  remem- 
bered, was  urged  by   the  railroad  companies   themselves. 


Till    /iifirsfiitr   Cmnnu  fci'  Act.  351 

Seven  years  hiter  an  ai't  was  passed  provitUng  that  ■ '  no 
railwaj'  within  tlie  United  States,  whose  road  forms  any 
part  of  a  line  or  road  over  which  cattle,  sheep,  swine  or 
other  animals  shall  be  conveyed  from  one  State  to  another, 
or  the  owners  or  masters  of  steam,  sailing  or  other  ves- 
sels carry  nig  or  transporting  cattle,  sheep  or  swine  or 
other(animals  from  one  State  to  another,  shall  confine  the^ 
same  in  cars,  boats  or  vessels  of  any  description  for  a 
longer  period  than  twenty-eight  consecutive  hours,  with- 
out unloading  the  same  for  water,  rest  and  feeding,  for  a 
period  of  at  least  five  consecutive  hours,  unless  prevented 
from  so  unloading  hy  storm  or  accidental  causes. "' 

Every  violation  of  this  act  was  made  punishable  by  a 
penalty  of  from  $100  to  $500. 

Though  Congress  had  asserted  the  right  to  regulate 
commerce  among  the  States,  it  had  made  previous  to  1873 
very  limited  use  of  that  power.  In  the  midst  of  the 
Granger  movement  the  Senate  of  the  United  States  passed 
on  the  26th  day  of  March,  1873,  the  following  resolu- 
tion: 

' '  Resolved,  That  the  Select  Committee  on  Transporta- 
tion Routes  to  the  Seaboard  be  authorized  to  sit  at  such 
places  as  they  may  designate  during  the  recess,  and  to 
investigate  and  report  upon  the  subject  of  transportation 
between  the  interior  and  the  seaboard;  that  they  have 
power  to  employ  a  clerk  and  stenographer,  and  to  send 
for  persons  and  papers.  ..." 

The  committee,  under  the  chairmanship  of  Mr.  Windom, 
discharged  their  duty  w^ith  great  fidelit}',  and  submitted 
their  report  to  the  Senate  during  its  next  regular  session. 
They  declared  that  the  defects  and  abuses  of  the  then  ex- 
isting systems  of  transportation  were  insufficient  facilities, 
unfair  discrimination  and  extortionate  charges.  As  the 
principal  causes  of   such   excessive   rates  they  assigned 


352  The_  Railroad   Question. 

stock  watering,  capitalization  of  surplus  earnings,  con- 
struction rings,  general  extravagance  and  coiTuption  in 
railway  management,  and  combinations  and  consolidations 
of  railway  companies.  The  committee  were  of  the  opinion 
that  the  promotion  of  competition  would  not  permanently 
remedy  the  existing  evils,  and  laid  it  down  as  a  general 
rule  that  competition  among  railwaj'S  ends  in  combination 
and  in  enhanced  rates.  As  expedient  and  practical  reme- 
dies for  the  existing  evils  they  recommended  the  following 
measures : 

1.  Direct  Congressional  regulation  of  railway  transpor- 
tation, under  the  power  to  regulate  commerce  among  the 
several  States. 

2.  Indirect  regulation  and  promotion  of  competition, 
through  the  agency  of  one  or  more  lines  of  railway,  to  be 
owned  and  controlled  by  the  Government. 

3 .  The  improvement  of  natural  water-ways  and  the  con- 
struction of  artificial  channels  of  water  communication. 

The  report  was  accepted  and  considered,  but  there  the 
matter  rested,  so  far  as  the  practical  results  were  con- 
cerned. 

In  1878  Mr.  JohnH.  Reagan,  of  Texas,  introduced  in  the 
House  of  Representatives  a  bill  for  an  act  to  regulate  rail- 
road companies  engaged  in  interstate  commerce.  This 
maj^  be  said  to  have  been  the  first  real  interstate  commerce 
bill  before  Congress.  It  was  a  progressive,  thorough  and 
well-planned  measure,  but  failed  to  receive  the  approval 
of  Congress  l)ecause  a  majority  of  its  members  considered 
it  too  radical  a  measure.  The  bill  contained  many  of  the 
provisions  of  the  present  Interstate  Commerce  Act,  includ- 
ing the  anti-pooling  and  the  long  and  short  haul  clauses; 
but  instead  of  creating  a  commission  it  lodged  in 
the  courts,  both  State  and  Federal,  the  power  to  enforce 
the  law. 


Tlie  Intcrsfate  Commerce  Act.  353 

Other  bills  were  introduced  from  year  to  year,  but 
during  a  period  of  nine  years  none  of  them  drew  sufficient 
votes  to  make  it  a  law.  Congress  may  be  said  to  have 
been  divided  into  thi-ee  camps  upon  the  railroad  question, 
viz. :  those  who  favored  the  sj^stem  of  regulation  proposed 
by  Mr.  Reagan,  those  who  favored  the  commissioner  sys- 
tem and  those  who  were  opposed  to  every  mode  of  Federal 
regulation  of  interstate  commerce.  In  the  meantime,  the 
inactivity  of  Congress  caused  considerable  restlessness 
among  the  people,  and  the  demand  for  action  became 
louder  every  year.  The  issue  entered  into  politics,  and  a 
number  of  Western  Congressmen  owed  their  failure  to  be 
re-elected  to  their  indifference  or  enmity  to  Federal  rail- 
road legislation. 

On  March  21st,"  1885,  under  authority  of  a  resolution 
adopted  by  the  Senate  of  the  United  States,  the  President 
of  the  Senate  appointed  a  select  committee  to  investigate 
and  report  upon  the  subject  of  the  regulation  of  the 
transportation  of  freight  and  passengers  between  the 
several  States  by  railroad  and  water  routes.  Senator 
Cullom,  of  Illinois,  became  its  chairman.  The  committee 
examined  a  large  number  of  witnesses,  including  railroad 
managers  and  shippers,  addressed  letters  to  the  railroad 
commissioners  of  the  several  States,  to  boards  of  trade, 
chambers  of  commerce,  State  boards  of  agriculture. 
Patrons  of  Husbandry,  Farmers'  Alliances,  etc. ,  and  made 
every  effort  to  obtain  the  opinions  of  those  who  had  given 
special  attention  to  the  transportation  problem. 

The  report  of  the  committee  was  submitted  to  the 
Senate  on  January  18,  1886.  Concerning  the  abuses  of 
railroad  transportation  it  differed  but  little  from  that  of 
the  Windom  committee.  The  report  declared  publicity  to 
be  the  best  remedy  for  unjust  discrimination  and  recom- 


354  Tlir   Rit'ihoiid  Question. 


mended  that  the  posting  of  rates  and  public  notice  of  all 
changes  in  tariffs  bo  required.  It  also  recommended  that 
a  greater  charge  for  a  shorter  than  a  longer  haul  be  made 
presumptive  evidence  of  an  unjust  discrimination,  and 
that  a  national  commission  be  established  for  the  enforce- 
ment of  any  laws  that  might  be  passed  for  the  regulation 
of  interstate  commerce.  Upon  the  question  of  pooling 
the  report  stated: 

"The  committee  does  not  deem  it  prudent  to  recom- 
mend the  prohibition  of  pooling,  which  has  been  urged 
by  many  shippers,  or  the  legalization  of  pooling  compacts, 
as  has  been  suggested  by  many  railroad  officials  and  by 
others  who  have  studied  the  question.  .  .  .  The 
majority  of  the  committee  are  not  disposed  to  endanger 
the  success  of  the  methods  of  regulation  proposed  for  the 
prevention  of  unjust  discrimination  by  recommending  the 
prohibition  of  pooling,  but  prefer  to  leave  that  subject  for 
investigation  by  a  commission  when  the  effects  of  the 
legislation  herein  suggested  shall  have  been  developed  and 
made  apparent." 

The  report  was  accompanied  by  a  bill  representing 
"  the  substantially  unanimous  judgment  of  the  committee 
as  to  the  regulations  which  are  believed  to  be  expedient 
and  necessary  for  the  government  and  control  of  the 
carriers  engaged  in  interstate  traffic." 

The  bill  was  before  Congress  for  more  than  a  year, 
receiving  several  important  amendments  before  its  final 
passage  in  both  houses.  It  was  approved  by  the  Presi- 
dent on  the  4th  day  of  Februar}^,  1887,  and  took  effect 
sixty  days  after  its  passage,  except  as  to  the  provisions 
relating  to  the  appointment  and  organization  of  an  Inter- 
state Commerce  Commission,  which  took  effect  at  once. 

The  act  contains  twenty-four  sections,  but  is  by  no 
means  cumbersome.  It  is,  in  many  respects,  the  most 
important  piece  of  legislation  that  has  been  had  in  Con- 


The  /iifrrsfdf,'  (\>»tiiicrce  Act.  355 


gress  for  the  i)ast  twenty  years.  It  applies  to  eommon 
carriers  engaged  in  the  transportation  of  passengers  or 
property  wiiolly  b}^  railroad,  or  partly  by  railroad  and 
partly  by  water,  when  both  are  used,  under  a  common 
control,  management  or  arrangement,  for  a  continuous 
carriage  or  shipment  from  one  State  or  Territory  of  the 
United  States,  or  the  District  of  Columl)ia,  to  any  other 
State  or  Territory  in  the  United  States  or  the  District  of 
Columbia,  or  from  any  place  in  the  United  States  to  an 
adjacent  foreign  country,  or  from  any  place  in  the  United 
States  through  a  foreign  countiy  to  any  other  place  in  the 
United  States.  It  prohibits  unjust  and  unreasonable 
charges,  special  rates,  rebates,  drawbacks,  undue  or  un- 
reasonable preferences,  advantages,  prejudices  and  dis- 
advantages, as  well  as  all  discriminations  between  con- 
necting lines.  It  makes  unlawful  a  less  charge  for  a 
longer  than  for  a  shorter  haul  over  the  same  line,  in  the 
same  direction,  the  shorter  being  included  within  the 
longer  distance,  except  when  specially  authorized  by  the 
Interstate  Commerce  Commission.  It  prohibits  pools, 
requires  schedules  of  freight  rates  and  passenger  fares  to 
be  kept  in  all  depots  and  stations,  permits  no  advance  in 
the  rates,  fares  and  charges  once  established,  except  after 
ten  days'  public  notice,  and  makes  it  unlawful  for  com- 
mon carriers  to  charge  either  more  or  less  than  schedule 
rates. 

It  also  requires  them  to  file  copies  of  all  schedules, 
traffic  contracts  and  joint  schedules  with  the  Interstate 
Commerce  Commission,  as  well  as  to  make  them  public 
when  directed  by  the  commission,  and  prohibits  combina- 
tions to  prevent  the  carriage  of  freight  from  being  con- 
tinuous from  the  place  of  shipment  to  the  place  of  desti- 
nation.    It  makes  common  carriers  liable  for  all  damages 


356  The  Railroad   Question. 

to  persons  injured  by  violations  of  the  act,  and  specially 
provides  that  any  court  before  which  such  a  damage  suit 
may  be  pending  may  compel  any  director,  officer,  re- 
ceiver, trustee  or  agent  of  the  defendant  company  to 
appear  and  testify  in  the  case,  and  that  the  claim  that 
any  such  testimony  or  evidence  may  tend  to  criminate  the 
person  giving  such  evidence  shall  not  excuse  such  witness 
from  testifying,  but  that  such  evidence  or  testimony  shall 
not  be  used  against  such  person  on  the  trial  of  any  crimi- 
nal proceeding.  It  likewise  subjects  such  officers  and 
employes  of  a  railroad  company  as  may  be  guilty  of  aid- 
ing or  abetting  in  violations  of  the  act  to  fines  not  exceed- 
ing $5,000  for  each  offense. 

These  provisions  are  covered  by  the  first  ten  sections 
of  the  act.  Section  11  establishes  the  Interstate  Com- 
merce Commission,  to  be  composed  of  five  commissioners 
appointed  by  the  President  b}^  and  with  the  advice  and 
consent  of  the  Senate.  It  provides  that  the  commissioners 
first  appointed  shall  continue  in  office  for  the  term  of  two, 
three,  four,  five  and  six  years,  respectively,  from  the  first 
of  January,  1887,  the  term  of  each  to  be  designated  by 
the  President,  and  that  their  successors  shall  be  appointed 
for  terms  of  six  years,  except  that  any  person  chosen  to 
fill  a  vacancy  shall  be  appointed  only  for  the  unexpired 
term  of  the  commissioner  whom  he  shall  succeed.  No 
more  than  three  commissioners  may  be  appointed  from 
the  same  political  party,  and  the  President  has  the  power 
to  remove  any  commissioner  for  inefficiency,  neglect  of 
duty  or  malfeasance  in  office.  Authority  is  given  to  the 
commission  to  inquire  into  the  management  of  the  busi- 
ness of  all  common  carriers  subject  to  the  provisions  of 
the  act  and  to  require  the  attendance  of  witnesses  and  to 
invoke  the  aid  of  any  court  of  the  United  States  for  that 
purpose. 


The  Interstate  Commerce  Act.  357 

Section  13  authorizes  an 3^  person,  firm,  corporation 
or  association,  any  mercantile,  agricultural  or  manufac- 
turing society,  any  body  politic  or  municipal  organization 
to  file  complaints  against  any  common  carrier  subject  to 
the  provisions  of  the  act,  with  the  commission,  whose  duty 
it  is  made  to  forward  a  statement  of  the  charges  to  such 
common  carrier  and  call  upon  him  to  satisfy  the  com- 
plaint or  answer  the  same  in  writing,  and  to  investigate 
the  matters  complained  of,  if  the  complaint  is  not  satis- 
fied. The  commission  is  also  charged  with  the  duty  of 
making  such  investigations  at  the  request  of  State  or  ter- 
ritorial railroad  commissions  and  may  even  institute  them 
at  its  own  motion.  Section  14  requires  the  commission 
to  make  a  report  in  writing  of  any  investigation  it  may 
make  and  to  enter  it  of  record  and  furnish  copies  of  it  to 
the  complainant  and  the  common  carrier  complained  of. 
Section  15  makes  it  the  commissioners'  dut}',  when  it  is 
found  that  any  law  cognizable  by  it  has  been  violated 
by  a  common  carrier,  to  serve  notice  on  such  carrier 
to  desist  from  such  violation  and  to  make  repara- 
tion for  an  injurj'  found  to  have  been  done.  If 
any  lawful  order  or  requirement  of  the  commission  is 
disobeyed  by  a  common  carrier,  it  becomes  their  duty 
and  is  lawful  for  any  company  or  person  interested  in 
such  order  to  apply  by  petition  to  the  Circuit  Court  of  the 
United  States  sitting  in  equity  in  the  judicial  district  in 
which  the  common  carrier  complained  of  has  its  principal 
office,  and  the  court  has  power  to  hear  and  determine  the 
matter  speedily  and  without  the  formal  pleadings  and 
proceedings  applicable  to  ordinary  suits,  and  to  restrain 
the  common  carrier  from  continuing  such  violation  or  dis- 
obedience. It  is  further  provided  by  this  section  that  on 
such  hearings  the  report  of  the  commission  shall  be 
accepted  as  prima  facie  evidence. 


358  Thr   RuiJroad   Qnrstin,,. 

Section  17  regulates  the  proceedings  of  the  commis- 
sion. A  majorit}'  constitute  a  quorum  for  the  transaction 
of  business.  The  commission  may  f  r(Jm  time  to  time  make 
or  amend  rules  for  the  regulation  of  proceedings  before  it. 
Any  party  maj'  appear  before  it  and  be  heard  in  person  or 
by  attorney,  and  everj'  vote  or  official  act  of  the  commis- 
sion must  be  entered  of  record  and  its  proceedings  made 
public  upon  the  request  of  either  party  interested. 

Section  19  provides  that  the  principal  office  of  the 
commission  shall  be  in  Washington,  but  that  for  the  con- 
venience of  the  public  it  may  hold  special  sessions  in  any 
part  of  the  United  States. 

Section  20  authorizes  the  commission  to  require 
annual  reports  from  all  common  carriers  subject  to  the 
proAisions  of  the  act,  to  fix  the  time  and  prescribe  the 
manner  in  which  such  reports  shall  be  made,  and  to  re- 
quire from  such  carriers  specific  answers  to  all  questions 
upon  which  the  commission  ma}'  need  information. 

Section  21  excepts  from  the  operation  of  the  act  the 
carriage  of  property  for  the  United  States,  State  or  muni- 
cipal governments,  or  for  charitable  purposes,  or  for  fairs 
and  expositions;  also  the  issuance  of  mileage,  excursion 
and  commutation  tickets,  the  gi^^ng  of  reduced  rates  to 
ministers  of  religion,  the  free  carriage  by  a  railroad  com- 
pany of  its  own  officers  and  employes,  and  the  exchanging 
of  passes  or  tickets  among  the  principal  officers  of  rail- 
road companies. 

The  sections  not  noticed  are  of  minor  importance, 
relating  to  annual  reports,  salaries,  appropriations  of 
funds,  etc. 

The  act  was  amended  on  March  2,  1889,  but  the 
amendments  made  did  not  materially  affect  its  principal 
pi'o  visions. 


The  Interstate  Commerce  Act.  359 

When  the  law  was  passed  its  friends  well  realized  that  its 
success  would  greatly  depend  on  the  character  of  the  com- 
missioners whom  it  was  incumbent  upon  the  President  to 
appoint.  It  Avas  feared  that  if  the  railroad  influence 
should  control  these  appointments,  the  power  to  suspend 
the  long  and  short  haul  clause  would  be  the  chief  and 
perhaps  the  only  power  exercised  by  the  commission. 
There  was  great  danger  that  the  office  o^  Interstate  Com- 
merce Commissioner  might  become  a  sinecure  for  servile 
railroad  lawyers,  as  similar  State  officers  had  been  before, 
and  that  a  public  trust  might  be  turned  into  an  additional 
corporation  agency  for  evil.  The  selection  of  the  com- 
missioners, and  especially  that  of  Judge  T.  M.  Cooley,  of 
Michigan,  was  greatly  to  the  credit  of  President  Cleve- 
land. A  man  of  unquestionable  integrit}',  an  eminent 
jurist  and  close  student  of  railroad  affairs,  Judge  Cooley 
was  particuliarly  well  qualified  for  the  otRce  of  chairman 
of  the  Interstate  Commerce  Commission,  which  he  occu- 
pied for  nearly  five  years  with  signal  fitness,  and  from 
which  he  only  retired  to  the  sincere  regret  of  the  American 
people.  Under  Judge  Cooley's  leadership  the  commis- 
sion has  been  more  than  a  purely  executive  board.  It 
was  under  the  Constitution  not  in  the  power  of  Congress 
to  clothe  the  Interstate  Commerce  Commission  with  full 
judicial  authority  without  giving  its  members,  like  other 
Federal  judges,  tenure  for  life,  instead  of  a  term  of  years. 
The  inherent  force  of  the  commission's  decisions  in  its 
interpretation  of  the  law  made  them  in  many  cases  virtu- 
ally the  equivalent  of  judicial  rulings. 

A  few  of  the  most  important  decisions  of  the  commis- 
sion may  be  mentioned  here.  Construing  the  long  and 
short  haul  clause,  they  held  that,  in  case  of  complaint  for 
violating  this  section  of  the  act,   "  the  burden  of  proof  is 


360  The  Railroad  Question. 

on  the  carrier  to  justify  any  departure  from  the  general 
rule  described  by  the  statute,  by  showing  that  the  circum- 
stances and  conditions  are  substantially  dissimilar."  They 
also  decided  that  ' '  when  a  greater  charge  in  the  aggregate 
is  made  for  tlie  transportation  of  passengers  or  the  like 
kind  of  property  for  a  shorter  than  a  longer  distance  over 
the  same  line  in  the  same  direction,  the  shorter  being  in- 
cluded in  the  longer  distance,  it  is  not  sufficient  justification 
therefor  that  the  traffic  which  is  subjected  to  such  greatet 
charge  is  way  or  local  traffic  and  that  which  is  given  the 
more  favorable  rates  is  not ;  and  that  it  is  not  ' '  sufficient 
justification  for  such  greater  charge  that  the  short-haul 
traffic  is  more  expensive  to  the  carrier,  unless  when  the 
circumstances  are  such  as  to  make  it  exceptionally  exces- 
sive, or  the  long-haul  traffic  exceptionally  inexpensive, 
the  difference  bemg  extraordinary  and  susceptible  of 
definite  proof;  nor  that  the  lesser  charge  on  the  longer 
haul  has  for  its  motive  the  encouragement  of  manufact- 
ures or  some  other  branch  of  industry,  nor  that  it  is  de- 
signed to  build  up  business  or  trade  centers." 

Upon  the  question  of  publicity  of  the  railroad  business 
the  commission  held  that,  as  the  books  of  the  defendant 
carriers,  as  to  rates  charged,  facilities  furnished  and 
general  movements  of  freight,  are  in  the  nature  of 
semi-public  records,  the  officers  and  agents  of  defendant 
carriers  ought  to  give  promptly  to  a  complainant  any 
statement  of  facts  called  for,  if  such  statement  may 
probably  have  importance  on  the  hearing. 

Judge  Brewer's  opinion  as  to  what  constitutes  a  reason- 
able rate  was  evidently  not  shared  by  Judge  Cooley  and 
his  colleagues,  for  in  the  case  of  the  New  Orleans  Cotton 
Exchange  vs.  the  Cincinnati,  New  Orleans  and  Pacific 
Railway  Company  the  commission  decided  tliat  the  fact 


The  Literstate  Commerce  Act.  361 


that  a  road  earns  but  little  more  than  operating  expenses 
cannot  be  made  to  justify  grossly  excessive  rates,  and 
that  ' '  wherever  there  are  more  roads  than  the  business 
at  fair  rates  will  remunerate,  they  must  rel}^  upon  future 
earnings  for  the  return  of  investments  and  profits."  In 
another  case  the  commission  hold  that  ''in  fixing  reason- 
able rates  the  requirements  of  operating  expenses,  bonded 
debt,  fixed  charges  and  dividend  on  capital  stock  from 
the  total  traffic  are  all  to  be  considered,  but  the  claim  that 
any  particular  rate  is  to  be  measured  by  these  as  a  fixed 
standard,  below  which  the  rate  may  not  lawfully  be 
reduced,  is  one  rightly  subject  to  some  qualifications,  one 
of  which  is  that  the  obligations  must  be  actual  and  in  good 
faith." 

The  rules  governing  the  proper  construction  of  classifi- 
cation sheets  which  the  commission  has  laid  down  are 
founded  upan  common  sense  and  justice.     The3^say: 

"A  classification  sheet  is  put  before  the  public  for 
general  information;  it  is  supposed  to  be  expressed  in  plain 
terms  so  that  the  ordinary  business  man  can  understand  it 
and,  in  connection  with  the  rate  sheets,  determine  for  him- 
self what  he  can  be  lawfully  charged  for  transportation. 
The  persons  who  prepare  the  classification  have  no  more 
authority  to  construe  it  than  anybody  else,  and  they  must 
leave  it  to  speak  for  itself." 

In  defining  what  is  legitimate  traffic  the  commission 
made  the  following  decision: 

"  The  transportation  of  traffic  under  circumstances  and 
conditions  that  force  a  low  rate  for  its  carriage  or  an 
abandonment  of  the  business,  but  which  afl'ords  some 
revenue  above  the  cost  of  its  movement,  and  works  no 
material  injustice  to  other  patrons  of  a  carrier,  is  to  be 
deemed  legitimate  competition.  When,  however,  its  car- 
riage is  at  a  loss  and  imposes  a  burden  on  like  traffic  at 
other  points  and  on  other  traffic,  it  is  to  be  deemed 
destructive  and  illegitimate  competition." 


362  The  Railroad   Qaestion. 

It  has  been  shown  in  a  former  chapter  that  the  weaker 
oil  refiners  have  been  discriminated  against  by  the  rail- 
roads, which  permitted  the  Standard  Oil  Company  to  use 
their  own  tank  cars  in  the  shipment  of  oil  and  charge  its 
competitors  excessive  rates  for  like  shipments  in  barrels. 
Complaint  being  made  of  this  discrimination,  the  commis- 
sion held  that  it  is  properly  the  business  of  a  carrier  by 
railroad  to  supply  rolling  stock  for  the  freight  he  offers  or 
proposes  to  carry,  and  that  ' '  if  the  diversities  and  pecu- 
liarities of  traffic  are  such  that  this  is  not  always  practical, 
and  the  consignor  is  allowed  to  supply  it  for  himself,  the 
carrier  must  not  allow  its  own  deficiencies  in  this  particu- 
lar to  he  made  the  means  of  putting  at  unreasonable  dis- 
advantage those  who  may  use  in  the  same  traffic  all  the 
facilities  which  it  supplies. " 

A  most  important  ruling  of  the  commission  is  that  re- 
lating to  the  pass  abuse.  Complaint  was  made  that  the 
Boston  and  Maine  Uailroad  Company  issued  in  the  States 
of  Maine,  New  Hampshire,  Vermont  and  Massachusetts 
free  passes  to  certain  classes  of  .persons,  among  them 
' '  gentlemen  long  eminent  in  the  public  service,  higher 
officials  of  the  States,  prominent  officials  of  the  United 
States,  members  of  the  legislative  railroad  committees 
of  the  above  named  States,  and  persons  whose  good  will 
was  claimed  to  be  important  to  the  defendant. "  The  com- 
mission decided  that  such  a  discrimination  is  unwarranted, 
that  a  carrier  is  bound  to  charge  equally  to  all  persons, 
regardless  of  their  relative  individual  standing  in  the  com- 
munity, and  that  the  words  ' '  under  substantially  similar 
circumstances  and  conditions  "  relate  to  the  nature  and 
character  of  the  service  rendered  by  the  carrier,  and 
not  to  the  official,  social  or  business  position  of  the 
passenger. 


The  Interstate  (Jommcrce  Act.  363 


It  is  a  notorious  fact  that  the  practice  of  issuing  free 
passes  to  public  officials  and  other  influential  persons  has 
been  more  or  less  indulged  in  by  nearly  every  railroad  in 
the  country  up  to  the  present  time.  It  is  to  be  hoped 
that  this  ruling  of  the  commission  will  be  enforced  in 
such  a  manner  as  to  put  an  end  to  this  intolerable  abuse. 

The  Interstate  Commerce  Commission  has  been  equally 
efficient  in  its  administrative  capacit}^  From  the  very  fii-st 
it  called  attention  to  the  great  advantage  of  having  one 
classification  of  freight  throughout  the  country,  and  it  has 
since  labored  diligently  to  unify  the  various  classifications 
in  use.  As  the  commission  in  this  undertaking  is  only 
armed  with  the  armor  of  moral  suasion,  it  is  a  difficult 
task;  but  there  is  little  doubt  that  the  accomplishment  of 
this  great  reform  is  onl}'  a  question  of  a  few  years. 
Iniquities  in  classifications  and  rates  are  constantly  pointed 
out  by  the  commission  and  corrected  by  the  companies. 
Moreover,  the  annual  reports  of  the  commission,  not  to 
mention  its  very  excellent  statistical  data,  diffuse  much 
useful  information  and  dispel  many  delusions.  Thus  the 
fourth  annual  report  of  the  commission  says: 

' '  A  stranger  to  the  law  might  infer,  from  some  public 
addresses  and  pamphlets  which  have  assumed  to  discuss 
this  subject,  that  the  railroad  companies  were  prohibited 
from  carrying  the  necessities  of  life  over  long  distances  at 
ver}'  low  rates,  unless  their  rates  on  other  subjects  of 
transportation  for  shorter  distances  were  made  to  corre- 
spond. Indeed,  instances  have  been  pointed  out  in  which 
it  was  said  that  certain  articles  of  commerce  could  not  now 
be  transported  for  long  distances,  because,  by  reason  of  this 
provision,  they  would  not  bear  the  charges  that  must 
under  compulsion  of  law  be  imposed  upon  them.  Amono- 
such  instances  has  been  mentioned  the  granite  industry  of 
New  England,  as  to  which  it  has  been  said  that  valuable 
manufactories  have  ceased  to  be  profitable  because  it  has 


364  Tlir  Railroad  Question. 

now  become  impossible  for  tlie  proprietors  to  obtain  from 
the  I'ailroad  companies  the  nominal  rates  for  the  transpor- 
tation of  their  products  which  the}'  formerly  enjoyed, 
since  it  is  now,  b}'  the  long  and  short  haul  clause,  made 
criminal  for  the  companies  to  give  such  rates. 

"  A  complaint  of  this  nature  is  not  to  be  met  by  argu- 
ment, because  it  is  baseless  in  point  of  fact.  The  instance 
mentioned  may  safely  be  assumed  to  be  chosen  rather 
from  regard  to  the  need  of  an  attack  upon  the  law  than 
from  any  belief  in  the  justice  of  its  application.  The 
prohibition  of  the  fourth  section,  so  far  as  concerns  this 
article  of  commerce,  or  an}"  other  that  can  be  named,  will 
have  no  application  whatever  until  it  is  made  to  appear 
that  elsewhere  upon  the  lines  of  the  road  conveying  it 
there  is  property  of  the  same  kind,  for  transportation  by 
the  same  carriers  in  the  same  direction,  upon  which  the 
carriers  are  disposed  to  making  greater  charges  in  the 
aggregate  for  the  shorter  hauls. 

"The  wheat  of  the  extreme  West,  it  is  also  said,  can 
no  longer  have  the  nominal  rates  which  were  formerly 
made  for  transportation  to  the  seabo^lrd,  but  this  assertion 
is  also  without  point  or  applicability,  unless  it  is  shown 
that  the  carriers  are  not  only  disposed  to  give  such  rates, 
but  propose  to  make  up  for  the  consequent  losses  to  them 
selves  by  the  imposition  of  greater  charges  in  the  aggre- 
gate for  the  carriage  of  the  like  grain  when  offered  for 
carriage  by  growers  in  the  States  nearer  the  seaboard. 
Nominal,  rates  impartially  made  as  between  shippers  of 
like  articles  in  the  same  direction  and  under  iike  circum- 
stances and  conditions  are  as  admissible  now  as  they  ever 
were." 

The  same  report  contains  a  rather  pointed  reply  to 
Judge  Brewer's  ruling  in  the  Iowa  rate  cases,  viz.,  that, 
"  where  the  rates  prescribed  will  not  pay  some  compensa- 
tion to  the  owners,  then  it  is  the  duty  of  the  courts  to  in- 
terfere and  protect  the  companies  from  such  rates,"  and 
that  compensation  implies  three  things:  "Payment 
of  cost  of  service,  interest  on  l)onds  and  then  some  divi- 


Tlie  Interstate  Cummerce  Act.  365 


dends. "     The  commission  reviews  this  stupid  rule  as  fol- 
lows: 

' '  The  effort  has  sometimes  been  made  to  indicate  a 
rule  wliich  must  constitute  the  mhiimum  of  reduction  in 
all  cases,  and  it  has  been  said  that  rates  must  not  be  made 
so  low  that  the  carriers  would  be  left  unable  to  pay  inter- 
est on  their  obligations  and  something  by  way  of  divi- 
dend to  stockholders,  after  maintaining  the  road  in  proper 
condition  and  paying  all  running  expenses.  This  comes 
nearer  to  a  suggestion  of  a  rule  of  law  for  these  cases 
than  any  other  that  has  come  to  the  knowledge  of  the 
commission.  But  it  is  so  far  from  being  a  rule  of  law, 
that  it  is  not  even  a  rule  of  polic}',  or  a  practical  rule  to 
which  any  name  can  be  given,  and  to  which  the  carriers 
themselves  or  the  public  authorities  can  conform  their 
action.  In  the  first  place,  when  we  take  into  considera- 
tion the  question  of  the  condition  of  roads  and  of  equip- 
ment, the  proper  improvements  to  be  made,  the  new  con- 
veniences and  appliances  to  be  considered  and  made  use 
of,  if  deemed  desirable,  and  the  innumerable  questions 
that  are  involved  in  the  matter  of  running  expenses,  it  is 
very  obvious  that  there  can  be  no  standard  of  expenses 
which  the  court  can  act  upon  and  apply,  but  that  the 
whole  field  is  one  of  judgment  in  the  exercise  of  a  rea- 
sonable discretion  by  the  managing  powers  or  by  the  pub- 
lic authorities  in  reviewing  their  action.  It  is  to  be  borne 
in  mind  that  there  are  many  roads  in  the  country  that 
never  have  been  and  in  all  probability  never  will  be  able 
to  pa}'  their  ol)ligations  and  to  pay  dividends,  even  the 
slightest,  to  their  stockholders.  .  .  If  the  rule  suggested 
is  a  correct  one,  and  must  be  adhered  to  by  the  public 
authorities,  then  it  is  entirely  impossible  that  those  who 
operate  these  roads  can  prescribe  excessive  charges,  since 
it  is  impossible  to  fix  any  rates  that  would  bring  their 
revenues  up  to  the  point  of  enabling  them  to  pay  any 
diNadends  ....  But  the  rule  suggested  would  also  be 
one  under  which  those  roads  would  be  entitled  to  charge 
the  most  which,  instead  of  being  built  with  the  money  of 
the  stockholders  themselves,  had  been  constructed  with 


366  Thr    Rdilrdiul   (Jursfion. 


money  borrowed ;  the  larger  the  debt  the  higher  being  the 
rates  that  would  be  legal.  If  a  road  were  out  of  debt  so 
that  it  had  no  bonds  to  provide  for,  it  must  content  itself 
with  such  rates  as  would  pay  some  dividend  to  its  stock- 
holders. If  the  road  were  in  debt,  though  it  perhaps 
served  the  same  communities,  it  might  be  entitled  to 
charge  rates  50,  or  possibl}'  100  per  cent  higher.  .  .  .  But 
over  and  beyond  all  this  the  attempt  to  apply  the  rule 
suggested  would  be  absolutely  futile  for  the  reason  that 
the  rates  prescribed  for  one  road  would  necessarily  affect 
all  others  that  either  directly  or  indirectly  came  in  com- 
petition with  it." 

It  is  no  exaggeration  to  say  that  the  annual  reports  of 
the  commission  stand  unexcelled  as  dauntless,  clear,  con- 
cise and  instructive  public  documents.  It  may  also  be 
asserted  that  whatever  success  has  so  far  attended  the 
Interstate  Commerce  Law,  that  success  is  in  a  great  meas- 
ure due  to  the  tact,  courage  and  ability  of  the  men  who, 
in  the  past,  have  been  the  guiding  spirits  of  the  commis- 
sion. 

Efforts  will  be  made  by  railroad  managers  in  the  fut- 
ure, as  they  have  been  made  in  the  past,  to  weaken  the 
commission  by  securing  the  appointment  of  men  servile 
tx)  the  railroad  interest  as  members  of  that  body. 

Mr.  Depew  says  that  ' '  all  railroad  men  are  politicians, 
and  active  ones. "  This  is  true  as  to  manipulating  man- 
agers and  will  continue  to  be  so  just  as  long  as  we  allow 
such  extraordinary  powers  to  be  exercised  by  them. 
The  saloon  men  are  politicians,  and  active  ones.  There 
is  not  a  city  or  town  in  this  broad  land  that  is  not  in  dan- 
ger of  falling  under  their  sway  unless  their  offensive 
efforts  are  resisted.  The  old  United  States  Bank  man- 
agers were  politician^,  and  active  ones.  They  perverted 
the  trust  reposed  in  their  hands  to  such  an  extent  that 
the  indignation  of  the  people  was  aroused,  and  under  the 


Tlic  Interstate  Commerce  Act.  307 

lead  of  a  steru  old  patriot  the  bank  was  swept  out  of  ex- 
istence. Shall  we  restrain  corporation  management, 
within  proper  limits  and  make  corporations  serve  the  pub- 
lic welfare,  or  shall  we  let  the  abuses  go  on  until  the  peo- 
ple, under  the  lead  of  another  Jackson,  demand  emphati- 
cally the  application  of  some  remedy,  for  better  or  for 
worse?  Perhaps  Government  ownership,  perhaps  some- 
thing else.  Nations,  like  individuals,  should  profit  by 
the  experience  of  the  past. 

The  Interstate  Commerce  Commission,  in  their  sixth 
annual  report,  say,  concerning  the  Interstate  Commerce 
Law: 

' '  It  was  scarcely  possible  that  it  should  be  so  complete 
and  comprehensive  at  the  outset  as  to  require  no  altera- 
tion or  amendment.  Those  who  are  familiar  with  the 
practices  which  obtained  prior  to  the  passage  of  this  law, 
and  contrast  them  with  the  methods  and  conditions  now 
existing,  will  accord  to  the  present  statute  great  influence 
in  the  direction  of  necessary  reforms  and  a  high  degree  of 
usefulness  in  promoting  the  public  interest. 

' '  Whoever  will  candidly  examine  the  reports  of  the  com- 
mission from  3'ear  to  year,  and  thus  become  acquainted 
with  the  work  which  has  been  done  and  is  now  going  on, 
will  have  no  doubt  of  the  potential  value  of  this  enact- 
ment in  correcting  public  sentiment,  restraining  public 
injustice  and  enforcing  the  principle  of  reasonable 
charges  and  equal  treatment.  Imperfections  and  weak- 
nesses which  could  not  ])e  anticipated  at  the  time  of  its 
passage  have  since  been  disclosed  by  the  effort  to  give  it 
effective  administration.  The  test  of  experience,  so  far 
from  condemning  the  policy  of  public  regulation,  has 
established  its  importance  and  intensified  its  necessity. 
The  very  respects  in  which  the  existing  law  has  failed  to 
meet  public  expectation  point  out  the  advantages  and 
demonstrate  the  utility  of  Grovernment  supei'vision.    .    .    . 

"Of  this  much  we  are  convinced:  The  public  demand 
for  Government   regulation  and   the  necessity  for  legal 


368  '  The  Railroad  Question. 

protection  against  the  encroachments  of  railroad  corpora- 
tions have  not  been  diminished  by  the  experience  of  the 
last  six  years.  The  act  to  regulate  commerce  was  not 
framed  to  meet  a  temporary  emergency,  nor  in  obedience 
to  a  transient  and  spasmodic  sentiment.  The  people  will 
not  tolerate  a  return  to  the  injustice  and  wrong-doing 
which  inevitably  occurs  when  no  correction  is  undertaken 
and  no  regulation  attempted.  The  evils  of  unrestricted 
management  will  not  be  permanentl}'  endured,  and  legal 
remedies  will  continue  to  be  sought  until  they  are  amply 
provided.  The  present  statute,  however  crude  and  inade- 
quate in  many  respects,  was  the  constitutional  exercise  of 
most  important  powers  and  the  legislative  expression  of 
a  great  and  wholesome  principle.  Its  fundamental  and 
pervading  purpose  is  to  secure  equality  of  treatment.  It 
assumes  that  the  railroads  are  engaged  in  a  public  service, 
and  requires  that  service  to  be  impartially  performed.  It 
asserts  tlie  right  of  every  citizen  to  use  the  agencies 
which  the  carrier  pro\ides  on  equal  terms  with  all  his 
fellows,  and  finds  an  invasion  of  that  right  in  every  unau- 
thorized exemption  from  charges  commonly  imposed. 

"The  railroad  is  justly  regarded  as  a  public  facility 
which  every  person  may  enjoy  at  pleasure,  a  common 
right  to  which  all  are  admitted  and  from  which  none  are 
excluded.  The  essence  of  this  right  is  equality,  and  its 
enjoyment  can  be  complete  only  when  it  is  secured  on  like 
conditions  by  all  who  desire  its  benefits.  The  railroad 
exists  by  virtue  of  authorit}^  proceeding  from  the  State, 
and  thus  ditt'ers  in  its  essential  nature  from  every  form  of 
private  enterprise.  The  carrier  is  invested  with  extraor- 
dinary powers,  which  are  delegated  bj'  the  sovereign,  and 
thereljy  performs  a  governmental  function.  The  favorit- 
ism, partiality  and  exactions  which  the  law  was  designed 
to  prevent  resulted,  in  large  measure,  from  a  general 
misapprehension  of  the  nature  of  transportation  and  its 
vital  relation  to  commercial  and  industrial  progress.  So 
far  from  being  a  private  possession,  it  differs  from  every 
species  of  propert}',  and  is  in  no  sense  a  commodity.  Its 
office  is  peculiar,  for  it  is  essentially  pul)lic.  The  railroad, 
therefore,  can  rightfully  do  nothing  which  the  State  itself 


The  Interstate  Commerce  Act.  369 


might  not  do  if  it  performed  this  pul)lic  service  through 
its  own  agents  instead  of  delegating  it  to  corporations 
which  it  has  created.  The  large  shipper  is  entitled  to  no 
advantage  over  his  smaller  rival  in  respect  of  rates  or 
accommodations,  for  the  compensation  exacted  in  every 
case  should  be  measured  by  the  same  standard .  To  allow 
any  exceptions  to  this  fundamental  rule  is  to  subvert  the 
principle  upon  which  free  institutions  depend  and  substi- 
tute arbitrary  caprice  for  equality  of  right. 

' '  The  spirit  of  the  law  is  opposed  to  usages  so  long 
continued  and  so  familiar  that  their  unjust  and  demoraliz- 
ing character  has  not  been  clearly  perceived,  but  it  is 
a  long  step  towards  such  regulation  of  the  agencies  of 
transportation  as  will  make  them  equally  available  to  all 
without  discrimination  between  individuals  or  communi- 
ties. It  can  hardly  be  the  fault  of  those  who  are  charged 
with  its  administration  if  the  beneficial  aims  of  this  statute 
have  not  been  fully  attained  and  compliance  with  its  pro- 
visions not  completely  secured.  A  better  understanding 
of  its  purpose  and  an  educated  public  sentiment,  aided  by 
the  needful  amendments  which  experience  suggests,  will 
fully  vindicate  the  policy  of  Congress  in  undertaking  to 
bring  the  great  transportation  interests  of  the  country  into 
general  harmony  with  its  requirements. 

' '  It  affords  us  gratification  to  add  that  many  railroad 
managers  of  the  highest  standing  now  concede  the  neces- 
sity for  Government  regulation,  and  avow  themselves  in 
favor  of  such  further  enactments  as  will  make  that  regula- 
tion etifective. " 


CHAPTER  XIII. 

THE  RATE  QUESTION. 

RAILROAD  managers  frequentl}-  make  the  assertion 
that  the  average  freight  rates  charged  in  the  United 
States  are  lower  than  those  usually  charged  in  European 
countries  and  that  this  fact  is  in  itself  sufficient  proof 
that  they  are  too  low.  A  comparison  of  the  transporta- 
tion problem  of  Europe  with  our  own  will  show  this  argu- 
ment to  be  fallacious. 

While  from  $25,000  to  $30,000  a  mile  is  a  very  liberal 
estimate  of  the  average  cost  of  American  roads,  the  aver- 
age cost  of  European  railroads,  owing  to  their  expensive 
rights  of  wa3%  substantial  road-beds  and  heavy  grades,  is 
probably  not  less  than  $75,000  per  mile.  British  railway 
companies  have  laid  out  for  the  purchase  of  land,  for 
right  of  wa}'  and  depot  accommodations  an  amount  about 
equal  to  the  entire  average  cost  of  American  roads  for 
the  same  number  oi.  miles. 

For  instance,  the  Southeastern  Company  paid  $20, 000 ; 
the  Manchester  and  Leeds  Company,  $30,750,  and  the 
London,  Birmingham  and  Great  Western,  $31,500  per  mile. 
The  first  Eastern  Counties  line  paid  even  $60,000  per 
mile  for  land  through  an  agricultural  district.  As  nearly 
as  can  be  ascertained,  the  average  cost  of  the  right  of 
way  of  railroads  was  over  $20,000  for  the  United  King- 
dom. In  Belgium  the  average  cost  of  the  right  of  way 
was  $11,000.  It  was  lower,  however,  in  the  other  coun- 
tries of  the  European  continent. 

The    topography   of    the    country    through    which   the 

370 


Tlic  Rate  Question.  871 


English  railways  are  built  is  such  as  necessitated  enor- 
mous expenses  for  heavy  embankments,  cuttings,  via- 
ducts, tunnels  and  bridges,  and  in  some  cases  increased 
the  cost  of  the  roads  to  fabulous  sums.  The  Lancashire 
and  Yorkshire  Railway  actually  cost  $260,000  per  mile 
for  the  whole  of  its  408  miles.  European  roads  have 
been  built  in  a  much  more  permanent  manner  and  have 
terminal  facilities  whose  cost  is  far  beyond  any  sum  paid 
for  such  purposes  in  this  country.  In  Great  Britain, 
moreover,  the  expenses  of  contests  and  of  procuring 
charters  have  been  very  great  and  have  probably  averaged 
$3,000  per  mile. 

English  railway  men  charge  Americans  with  having  in- 
dulged in  stock-watering  to  a  greater  extent  than  any 
other  people  in  the  world.  This  is  probably  true,  yet  the 
English  have  not  been  dull  students  of  this  art,  and  they 
are  far  from  free  of  having  indulged  in  this  luxury. 
Much  of  their  railroad  stock  was  issued  in  a  wasteful 
manner  and  represents  no  actual  investment,  and  it  is 
safe  to  say  that  from  30  to  40  per  cent,  of  their  present 
railroad  capitalization  is  water. 

If  upon  the  above  basis  both  Eui'opean  and  American 
railroads  are  to  yield  an  interest  of  -^k  per  cent,  on  the 
actual  investment,  the  former  will  have  to  earn  at  least 
$2,250  per  mile  more  than  the  latter,  and  this  difference 
equals  about  50  per  cent,  of  the  average  operatiuo- 
expenses  of  American  roads  per  mile.  Labor  is  cheaper 
across  the  Atlantic,  but  this  difference  is  more  than 
equalized  by  the  employment  of  a  much  larger  number  of 
men  per  mile,  as  the  following  table  will  show: 

Countries.  No.  of  men  employed       Average  wages  Wages  paid 

per  mile.  per  annum.  per  mile 

United  Kingdom 18 S335 .f(3,Oo'o 

Helg-ium 23 310 4.(;20 

Ivussia lo 340 H.tJOO 

(Germany 14 3.50 .^.r.oo 

France 14 230 .-{.OSO 

United  States "> 55,5.  .  . .' 2"635 


372  The  Railroad    Question. 

The  London  and  Northwestern  Railway  is  1,793  miles 
long  and  has  over  55,000  employes,  or  over  30  per  mile. 
The  Lancashire  and  Yorkshire  Company  employs  over 
42^per  mile. 

The  train  men  of  Europe  work  less  hours  and  earn  less 
per  capita  for  their  employers  than  do  the  train  men  of 
this  country.  The  average  annual  gross  earnings  per 
employe  on  sixteen  of  the  leading  lines  of  Great  Britain, 
as  shown  by  Mr.  Jeans,  appear  to  be  $975  against  $1,600 
on  fifteen  leading  lines  of  the  United  States,  while  the 
average  net  earnings  per  emplo3'e  are  $465  on  the  British 
lines  against  $720  on  the  American  lines;  making  a 
difference  in  favor  of  this  country  of  70  per  cent,  in  gross 
earnings  and  53  per  cent,  in  net  earnings.  If  American 
labor  is  more  expensive,  it  is  also  more  efficient  than 
labor  is  elsewhere. 

It  must  also  be  considered  that  the  average  haul  in 
Europe  is  much  less  than  the  average  haul  in  the  United 
States.  It  has  alwa3's  been  maintained  b}'  the  railroad 
companies,  and  very  justh',  too,  that  the  terminal  charges 
are  as  important  a  factor  of  freight  rates  as  is  the  cost  of 
carriage.  The  terminal  charges  are  the  same  for  a 
twenty-five- mile  haul  as  for  a  thousand-mile  haul;  they 
form  a  comparatively  large  part  of  the  total  charges  for 
the  former  and  a  ver}'  small  part  of  the  total  charges  for 
the  latter.  It  is  therefore  manifestly  unjust  to  compare 
tlie  rates  per  ton  per  mile  of  Europe  with  those  of  the 
United  States  without  making  due  allowance  for  the 
difference  in  the  length  of  their  average  hauls.  All  other 
things  ])eing  equal,  a  fair  comparison  between  the  freight 
rates  of  different  countries  should  be  based  upon  hauls  of 
equal  length. 

There  is  another  consideration  which  should  not  be  lost 
siffht  of.     The  commodities  in   the  United  States  which 


The  Rate  Question.  373 


contribute  principally  to  the  long  haul  are  raw  products. 
The  universally  low  rates  of  these  commodities  greatly 
lower  the  general  average.  In  Europe,  on  the  other 
hand,  manufactured  goods  predominate  as  long-haul 
freight,  and  based  upon  increased  risk  and  increased  cost  of 
carriage,  considerably  swell  the  general  average  of  freight 
charges.  The  railroads  of  the  United  States  also  do 
more  business  per  train  mile  than  those  of  any  other 
country  excepting  perhaps  Austria,  Russia  and  India. 
This  should  certainly  enable  them  to  do  business  for  less 
than  it  is  done  by  transatlantic  lines . 

In  addition  to  all  this,  a  number  of  European  countries, 
particularly  France,  require  their  railroads  to  perform 
large  services,  such  as  the  carrying  of  the  mails  and  the 
transportation  of  the  officers  and  employes  of  the 
Government,  gratuitously,  and  to  carry  soldiers  at  reduced 
rates. 

Another  factor  in  the  equation  should  be  considered. 
Eurpean  roads  are  built,  equipped  and  all  permanent  im- 
provements wholly  made  at  the  expense  of  the  stock-  and 
bondholders,  while  in  this  country  they  are  partially  con- 
structed at  the  expense  of  the  patrons  of  the  road.  In 
the  former  case  the  capitalization  of  the  road  represents 
what  has  been  paid  by  the  stock-and  bondholders,  and  in 
the  latter,  not  only  what  they  have  paid,  but  large  con- 
tributions paid  from  the  income  of  the  road  and  from 
public  and  private  donations. 

It  will  thus  be  seen  that  railroad  rates  ought  to  be  lower, 
and  even  much  lower,  here  than  in  Europe.  If  it  is  true 
that  the  average  rate  per  ton  per  mile  is  lower  in  America 
than  across  the  Atlantic,  this  is  chiefly  due  to  the  fact 
that  water  transportation  has  forced  down  through  (or  long- 
haul)  rates  and   has  thus  lowered   the   general   average. 


374  The.  Railroad    Question. 


This  reduction  was  by  no  means  made  voluntarily  by  the> 
railway  companies,  but  was  forced  upon  them.     Where  in 
the  United  States  water  does  not  exist,  as  in  local  traffic, 
rates  are  usually  much  higher  than  in  Europe. 

The  reduction  in  freight  rates  was  brought  about  by  a 
number  of  inventions  which  greatly  lowered  the  cost  of  » 
both  the  construction  and  the  operation  of  railways. 
Through  the  introduction  of  the  steam  shovel,  of  the 
wheel-scraper,  of  improved  rock-drills,  and  of  other  labor- 
saving  machines,  as  well  as  by  a  general  improvement  in 
the  methods  of  grading,  the  cost  of  grading  has  been 
reduced  from  25  to  50  percent.,  and  railroad  bridges  are 
now  built  at  one-third  of  their  former  cost.  Owing  to 
Bessemer's  great  invention,  steel  rails  can  at  the  present 
time  be  bought  for  one -half  of  what  iron  rails  cost  ten  or 
fifteen  years  ago,  and  about  one-third  of  the  cost  twenty 
years  ago.  According  to  David  A.  Wells,  the  author  of 
"Recent  Economic  Changes,"  the  annual  producing 
capacity  of  a  Bessemer  converter  was  increased  fourfold 
between  1873  and  1886,  and  four  men  can  now  make  a 
given  product  of  steel  in  the  same  time  and  with  less  cost 
of  material  than  it  took  ten  men  ten  years  ago  to  accom- 
plish. A  ton  of  steel  can  now  be  made  with  5,000 
poimds  of  coal,  while  it  required  twice  that  quantit}^  in 
1868.  When  it  is  considered  that  rails  and  tires  made  of 
steel  last  three  times  as  long  as  those  made  of  iron,  permit 
greater  speed,  carry  a  much  lai'ger  weight,  and  require 
less  repairs,  the  importance  to  the  railroad  interests  of  the 
improvements  made  in  the  manufacture  of  steel  can  hardly 
be  overestimated.  Similar  reductions  have  been  made  in 
the  car  and  machine  shops.  An  average  train  to-day 
probably  costs  no  more  than  one-half  as  much  as  it  did 
twenty  3'ears  ago.  Mr.  Wells,  in  the  work  just  mentioned, 
says: 


The  Rate  Quest i(ji).  375 


"  In  1870-"71  one  of  the  leading  railroads  of  the  North- 
western United  States  built  126  miles,  which,  with  some 
tunneling,  was  bonded  for  about  $40,000  per  mile.  The 
same  road  could  now  (1889)  be  constructed,  with  the  pay- 
ment of  higher  wages  to  laborers  of  all  classes,  for  about 
$20,000  per  mile." 

A  great  saving  has  also  oeen  made  in  the  consumption 
of  coal.  Under  favorable  circumstances  a  loaded  freight 
car  can  now  be  propelled  a  mile  with  one  pound  of  coal. 
A  similar  economy  of  fuel  has,  through  the  improvement 
of  their  engines,  been  effected  in  ocean  steamers.  The 
invention  of  the  compound  engine  has  reduced  the  expense 
of  running  about  one-half,  while  it  has  doubled  the  room 
left  for  the  cargo.  The  statement  has  recentl}'  been  made 
that  a  piece  of  coal  half  as  large  as  a  walnut,  when  burned 
in  the  compound  engine  of  a  modern  steamboat,  drives  a 
ton  of  food  and  its  proportion  of  the  ship  one  mile  on  its 
way  to  a  foreign  port. 

Furthermore,  the  invention  of  the  air-brake  has  ma- 
terially reduced  the  number  of  train  men  formerly  neces- 
sary to  safely  manage  a  train,  just  as  the  introduction  of 
steam-hoisting  and  other  machines,  both  upon  docks  and 
Vessels,  has  greatly  decreased  the  number  of  men  employed 
upon  the  mercantile  marine. 

There  is  certainl}'  much  similaritj^  between  the  railroad 
and  the  steamboat  as  agencies  of  transportation.  What- 
ever fuel  and  labor-saving  causes  operate  on  one  must 
necessarily  operate  upon  the  other.  When  we,  therefore, 
find  that  the  ocean  rates  are  only  from  one-third  to  one- 
fourth  of  what  they  were  thirty  years  ago,  we  are  justly 
surprised  to  see  railroad  i-ates  maintained  as  high  as  they 
are.  Operating  expenses  have  been  greatly  reduced  and 
passenger  travel  has  largely  increased  during  the  past 
twenty  years,  but  reductions  corresponding  in  the  passen- 
ger rates  of  the  raited  States  have  not  been  made. 


376  Tlie  Railroad  Question, 

It  is,  nevertheless,  no  easy  matter  always  to  determine 
what  are  reasonable  rates.  It  is  easier  to  tell  what  rates 
are  unreasonable,  Rates  are  unreasonable  that  bring  an 
income  in  excess  of  sufficient  to  keep  the  road  in  proper 
condition,  to  pay  operating  expenses,,  including  taxes  and 
a  fair  rate  of  interest  on  the  amount,  not  including  dona- 
tions, actually  invested  in  the  road.  The  patrons  of  a  road 
should  not  be  taxed  to  pay  interest  on  their  own  donations, 
or  on  public  donations,  to  the  road,  as  the  donations  were 
made  for  the  benefit  of  the  public,  and  not  for  the  benefit 
of  private  indi\1duals.  A  rate  which  may  appear  reason- 
able to  the  carrier  is  apt  to  be  regarded  as  too  high  by  the 
shipper;  and,  again,  one  that  seems  reasonable  to  the 
shipper  is  denounced  as  too  low  by  the  railroad  man. 
Each  is  tempted  to  consult  only  his  own  interests  and  to 
disregard  the  just  claims  of  the  other  side.  Thus,  while 
the  shipper  will  claim  that  his  rates  ought  to  be  low 
enough  to  enable  him  to  compete  with  other  shippers  more 
advantageously  located  than  he  is,  the  railroad  manager 
will  demand  a  rate  which  would  enable  him  to  declare  high 
di%idends  on  largely  fictitious  values.  The  owners  of  roads 
which  were  built  merely  for  purposes  of  speculation  or 
blackmailing  insist  on  being  permitted  to  charge  exorbi- 
tant rates  to  bring  up  their  earnings  to  the  level  of  those 
roads  for  whose  construction  there  was  a  legitimate 
demand. 

It  is  a  settled  principle  of  common  law  that  all  rates 
must  be  reasonable,  but  no  uniform  rule  has  as  yet  been 
adopted  by  which  the  question  of  reasonableness  is  to  be 
determined.  The  doctrine  laid  down  by  Judge  Brewer, 
that  "where  the  rates  prescribed  will  not  pay  some  com- 
pensation to  the  owners,  then  it  is  the  duty  of  the  courts 
to  interfere  and  protect  the   companies  from   such  rates," 


The  R((te  Question.  877 


and  that  ''compensation  implies  three  things:  cost  of 
service,  interest  on  bonds,  and  then  some  dividends,"  is 
absurd.  A  question  is  never  settled  until  it  is  settled 
right,  and  this  rule  is  certainly  open  to  very  serious 
objections.  A  road  may  be  bonded  for  several  times  its 
cost  or  its  real  value,  it  may  be  managed  with  such  reck- 
lessness or  extravagance  that  its  operating  expenses  may 
be  twice  what  they  would  be  under  a  careful  and  econ- 
omical management,  yet  under  this  rule  the  shipper  must 
pay  the  premium  which  bond-watering  and  bad  manage- 
ment command.  The  general  enforcement  of  such  a  rule 
would  place  the  public  at  the  mercy  of  scheming  railroad 
manipulators.  No  matter  to  what  extent  the  business  of 
a  road  may  increase,  a  reduction  of  rates  can  always  be 
prevented  hy  the  issue  of  new  bonds  and  the  doubling  of 
the  already  lordly  salaries  of  its  managers.  Again,  under 
the  operation  of  this  rule  a  road  which  entirely  suffices 
to  do  the  business  between  two  points  may  be  paralleled 
by  another  and  the  public  be  compelled  to  pay  excessive  . 
rates  to  maintain  both.  It  might  be  said  that  the  public 
cannot  be  forced  to  patronize  any  road,  that  if  it  would 
not  withdraw  its  patronage  from  the  old  line,  the  new 
line  would  soon  become  bankrupt,  and  that  in  such  an 
event  its  owners,  and  not  the  public,  would  be  the 
sufferers.  This  argument  may  be  met  by  the  statement 
that,  aside  from  the  fact  that  concerted  action  among  a 
large  number  of  people  can  never  be  secured,  few  roads 
rely  for  their  support  solely  upon  local  business,  and  that 
any  loss  which  the  older  road  sustains  from  encroach- 
ments by  its  rival  upon  its  through  traffic  it  is  compelled 
to  make  up  by  raising  its  rates  upon  its  local  business. 
It  is  the  almost  inevitable  consequence  when  one  road  is 
paralleled  by  another  that  the  business  which  was   pre- 


378  The  Railroad  Question. 

•_ '. 

viously  done  by  one  road  will  be  nearly  equall}"  divided 
between  the  two,  and  under  the  rule  laid  down  by  Judge 
Brewer  the  public  will  be  called  upon  to  pay  the  operat- 
ing expenses  and  the  interest  on  the  bonds  of  both, 
together  with  such  dividends  on  the  stock  as  the  finan- 
ciering ability  of  their  managers  may  secure.  The  better 
judgment  seems  to  be  that  to  determine  what  are  reason- 
able rates  is  not  a  question  for  judicial  adjudication. 

The  Interstate  Commerce  Commission,  in  their  fourth 
annual  report,  assert  that  "there  can  be  no  standard  of 
expense  which  the  courts  can  act  upon  and  apply,  but 
that  the  whole  field  is  one  of  judgment  in  the  exercise  of 
a  reasonable  discretion  by  the  managing  powers,  or  by 
the  public  authorities  in  reviewing  their  action."  Their 
views  upon  this  subject  are  still  more  definitely  stated  in 
the  following  words  contained  in  the  same  report: 

"An  attempt  is  made  to  give  authority  to  the  courts 
to  interfere  b}^  the  suggestion  that  property  or  charter 
contract  rights,  or  both,  are  involved  in  the  matter  of 
fixing  rates,  and  therefore  that  it  is  not  possible  the  con- 
.  elusions  of  administrative  boards  should  be  final.  This 
is  an  endeavor,  by  the  mere  use  of  words,  to  confer  juris- 
diction upon  the  courts  where  the  substance  is  altogether 
wanting.  Property  or  contract  rights  are  involved  in 
these  cases  precisely  as  they  are  in  numerous  other  cases 
of  the  exercise  of  power  under  the  police  authority  of  the 
State,  either  by  the  State  itself  or  by  its  municipalities." 

These  \aews  cannot  fail  to  commend  themselves  to  any 
unprejudiced  mind.  It  is  a  well-established  fact  that  all 
officials  will,  if  permitted,  extend  their  jurisdiction,  and 
j  udges  are  no  exception  to  the  rule.  It  was  therefore  but 
natural  that  the  courts  should  attempt  to  solve  the  prob- 
lem of  railroad  rates. 

The  attempt  so  far  has  been  fruitless,  nor  will  it  be 
otherwise  as  long  as  the  courts  persist  in  approaching 


Th:  Rate  Question.  379 


with  abstract  legal  maxims  a  question  whicli,  above  all 
things,  requires  the  light  of  experience  and  the  exercise 
of  sound  discretion.  The  question  of  railroad  rates  will 
never  be  satisfactorily  settled  until  it  is  definitely  referred 
to  expert  administrative  State  and  National  boards  em- 
powered and  prepared  to  meet  the  many  contingencies 
that  will  alwa^'S  arise  in  the  transportation  business. 

It  is  not  difficult  to  account  for  the  inability  of  the 
courts  to  properly  adjudicate  the  question  of  reasonable 
rates.  The  legislature,  or  a  board  to  which  it  has  dele- 
gated its  power,  prescribes  for  a  railroad  compan}^  a  class- 
ification and  tariff".  The  company  claims  that  the  rates 
so  fixed  are  unreasonably  low  and  applies  to  the  courts  for 
redress. 

Now,  if  the  rates  were  based  upon  the  cost  of  service 
only,  it  might,  perhaps,  be  possible  for  a  court  to  deter- 
mine whether  the  prescribed  rates  are  adequate  or  not. 
But  even  in  such  a  case  the  question  would  arise  whether 
the  capitalization  and  the  operating  expenses  of  the  road 
are  not  excessive,  and  its  determination  would  require  ex- 
pert knowledge  and  sound  discretion  rather  than  legal  lore. 
However,  since  the  cost  of  service  is  not  the  onl}-,  and 
with  railroad  men  not  even  an  essential,  factor  in  rate- 
making,  it  is  evident  that  the  rates  upon  single  commodi- 
ties can  not  be  reviewed  upon  their  individual  merits,  but 
the  tariff  must,  in  the  judicial  determination  of  the  ques- 
tion whether  it  is  reasonable  or  not,  be  viewed  as  a  whole. 
But  as  it  is  impossible  to  foretell  what  effect  a  readjusted 
tariff  would  have  on  the  revenues  of  a  road,  even  courts 
are  forced  to  admit  that  an  actual  trial  of  the  tariff  is 
necessary  to  establish  its  merits  or  demerits. 

If  the  complaining  company  were  as  anxious  to  give 
the  new  tariff'  a  fair  trial  as  it  usually  is  to  demonstrate  tO 


380  The  Railroad  Question. 


the  satisfaction  of  the  court  that  it  is  devoid  of  every 
principle  of  justice,  such  a  test  might  be  accepted  by  the 
public  as  a  reliable  basis  of  judicial  procedure.  But  rail- 
road managers  are  not  only  striving  to  perpetuate  their 
own  high  rates,  but  to  show  to  the  public  that  freight 
tariffs  not  emanating  from  a  railroad  company's  office  are 
of  necessity  crude  and  unjust  to  the  carrier.  They  know 
that  if  the}'  should  succeed  in  convincing  the  public  that 
administrative  boards  are  incapable  of  dealing  with  that 
question,  they  might  for  years  to  come  be  left  in  undis- 
puted possession  of  the  power  to  make  their  own  rates. 
This  is  certainly  for  the  railroad  manager  a  prize  worth 
contending  for,  and  no  sacrifice  is  too  great  for  him  to 
make  when  theie  is  any  hope  of  ultimate  victory.  Being 
absolutely  uncontrolled  in  his  action,  he  finds  it  an  easy 
matter,  by  temporarily  diverting  business  from  his  line,  by 
the  increase  of  operating  expenses  and  by  repressing 
growing  industries,  and  in  man}-  other  ways,  to  curtail  the 
business  of  his  road  and  diminish  its  revenues.  He  can 
court  losses  in  a  thousand  diflferent  ways  discernible 
neither  to  the  courts  nor  the  general  public.  In  short,  it 
is  in  the  power  of  any  railroad  manager  to  manipulate 
such  a  trial  in  his  own  interest,  and,  if  determined,  to  ob- 
tain a  verdict  against  any  tariff  not  of  his  own  making. 
This  policy  was  pursued  by  several  Iowa  roads  subsequent 
to  Judge  Brewer's  decision  that  the  alleged  unreasonable- 
ness of  the  Iowa  commissioners'  tariflf  must  be  established 
by  an  actual  trial,  and  was  persevered  in  until  the  suit 
was  withdrawn. 

But  even  if  the  competenc}'  of  the  courts  to  properlj' 
determine  such  questions  were  admitted,  there  would  still 
exist  one  serious  objection  to  their  jurisdiction.  Courts 
necessarilj'    move    slowly,    while    all    differences    arising 


Tlic  Rate  Question.  381 


between  the  public  ami  the  railways,  and  especially  those 
concerning  rates  of  .transportation,  require  prompt  and 
decisive  action.  There  are  no  fixed  conditions  in  com- 
merce. It  is  a  kaleidoscope  constantly  presenting  new 
phases.  Competition  at  home  and  abroad,  tarilT  duties, 
the  condition  of  tlie  crops  and  a  thousand  other  influences 
alfect  it  and  may  require  a  prompt  readjustment  of  the 
tariff.  So  long  as  railroad  companies  are  permitted  to 
resort  to  injunctions  and  effect  other  dela3's  rendered 
possil>le  through  tiie  machinery  of  the  courts,  to  prevent 
for  years  the  enforcement  of  tariffs  prescriljed  by  ad- 
ministrative authorities,  so  long  will  the  public  be  at  their 
mere}'.  So  long  as  they  have  nothing  to  lose  and  every- 
thing to  gain  b}'  a  judicial  contest,  it  will  be  their  policy 
to  delay  through  the  courts  the  enforcement  of  any  tariff', 
whether  prescribed  by  legislature  or  by  an  authorized 
commission,  that  falls  below  their  standard.  It  is  not  to 
be  understood  that  the  acts  of  railroad  commissioners 
should  never  be  subject  to  a  judicial  view.  If  such 
boards  clearly  exceed  their  authority  or  are  otherwise 
guilty  of  maladministration,  if  the}"  violate  constitutional 
rights,  then  railroad  companies,  if  injured  by  their  acts, 
should  be  permitted  to  seek  redress  in  the  courts;  but 
thev  should  not  be  permitted  to  nullify  an  official  tariff 
b}'^  legal  maneuvers.  It  is  clearly  not  within  the  province 
of  the  courts  to  make  rates  or  to  lay  down  rules  to  be 
followed  by  tho.se  to  whom  the  law  has  delegated  the 
power  to  make  them,  nor  should  the  courts  aid  the  rail- 
roads in  any  attempt  to  nullify  an  official  tariff  that  has 
been  legally  promulgated.  A  tariff  prepared  by  sworn 
and  disinterested  oflflcials  is  more  likel}'  to  be  just  than 
one  prepared  by  interested  railroad  men,  and  raili'oad 
companies  should  be  compelled  to  adopt  it  and  continue 


382  Tlir    Ralh-ddtl    Qiirsfif))). 


it  in  use  until  it  is  amended  or  revoked  by  legal 
authority. 

Individual  shippers  are  powerless  as  against  strong 
corporations.  Railroads  apply  to  the  courts  for  what 
they  are  pleased  to  term  redress,  and  in  the  meantime 
^  refuse  with  impunity  to  accept  an  official  tariff;  but  the 
shipper  has  no  protection :  he  must  pay  their  rates  or  go 
out  of  business.  What  reason  can  be  assigned  why  the 
weaker  should  thus  be  discriminated  against?  A  promul- 
gation of  a  tariff  prei^ared  l)y  a  commission  is  equivalent 
to  a  declaration  on  the  part  of  these  officials  that  the  rates 
or  some  of  the  rates  charged  by  the  railroads  are  un- 
reasonably high.  The  railroad,  in  applying  to  the  courts 
for  protection,  claims  that  the  tariff  prescribed  by  the 
commission  is  unreasonably  low.  Both  tariffs  are  there- 
fore impeached,  one  being  that  of  an  interested  private 
company,  the  other  that  of  a  disinterested  public  board. 
It  is  evident  that,  even  if  the  people  should  see  fit  to  give 
the  courts  jurisdiction  in  such  controversies,  one  of  these 
tariffs  must  temporarily  prevail  pending  the  decision  of 
the  court,  and  sound  public  policy  and  justice  to  the 
patrons  of  the  road  certainly  require  that  the  official 
tariff  be  recognized  by  the  courts  and  made  to  be  re- 
spected by  the  railroad  company  until  it  is  proved  to  be 
unreasonable  and  is  set  aside  by  lawful  authority. 

It  is  claimed  by  railroad  meh  that  they  should  be 
allowed  to  make  their  own  tariffs  because  rate-making  is 
so  intricate  a  subject  that  none  l)ut  railroad  experts  can  do 
it  justice.  If  this  were  so  the  courts  would  be  even  less 
competent  to  review  a  schedule  of  rates  than  a  State  or 
National  commission  would  be  to  make  one.  Courts  can- 
not be  expected  to  have  expert  knowledge  in  all  matters 
that  are  likely  to  be  brought  before  them.      They  must 


The  Ra^te  Question.  :]83 


rely  upon  the  testimony  of  expert  witnesses  Avhenever 
technical  questions  are  involved  in  the  determination  of 
cases.  The  identical  sources  of  mformation  from  which 
courts  di'aw  are  accessible,  or  may  be  made  accessible,  to 
a  commission,  which  has  the  additional  advantage  that  its 
members  may  be  selected  with  special  reference  to  their 
fitness  for  the  duties  which  they  will  be  called  upon  to 
perform  and  are  expected  to  devote  their  whole  time  to 
the  settlement  of  questions  arising  in  the  transportation 
business.  Such  a  commission  can  practicall}^  be  made  a 
court  with  jurisdiction  over  all  matters  connected  with  rail- 
road business.  The  railroad  manager,  no  doubt,  is 
thoroughly  familiar  with  the  wants  and  desires  of  his 
company;  but  it  may  fairly  be  presumed  that  he  is  less 
familiar  with  the  needs  of  the  public  than  a  railroad  com- 
mission whose  members  are  in  constant  communication 
with  the  people,  patiently  listen  to  the  complaints  of 
shippers,  court  and  receive  suggestions  as  to  needed 
changes  in  classification  and  rates,  and  study  the  relative 
advantages  of  the  different  sections  and  different  interests 
of  the  State  or  the  country  as  regards  transportation.  A 
railroad  freight  agent,  on  the  contrary,  is  disposed  to 
think  that  shippers  ought  to  be  satisfied  with  any  rate 
lower  than  those  charged  fifty  years  ago  for  carting  or 
other  crude  methods  of  transportation.  He  regards  their 
views  and  suggestions  as  chimerical  and  not  worthy  of 
any  notice,  and  does  not  even  hesitate  to  inform  them  that 
rate-making  is  a  branch  of  the  railroad  business  wholly 
beyond  their  comprehension,  and  ought  not  to  be  meddled 
with  or  even  inquired  into  by  the  public.  The  genei'al 
freight  agent  is  the  employe  of  a  company  which 
rates  his  usefulness  solely  by  his  ability  to  constantly 
increase  its  revenues,   and  he  invariably  proceeds  upon 


384  Tlie   Raih'O'zd  Question. 

the  theory  that  the  best  tariff  is  that  which  comes 
nearest  imposing  upon  each  commodity  offered  for 
carriage  the  maximum  transportation  tax  that  it  will 
bear.  A  man  who  entertains  such  opinions  cannot  be  sup- 
posed to  be  able  to  do  justice  to  the  shipper,  and  should  not 
be  permitted  to  act  as  arbitrator  in  rate  controversies 
between  the  public  and  the  company  whose  employe  and 
advocate  he  is.  Nor  have  we  any  reason  to  hope  for  a 
change  in  the  present  tariff  policy  of  railroads.  History 
has  sufficiently  demonstrated  the  fact  that  reforms  must 
come  from  without.  As  long  as  human  nature  remains 
as  it  is,  railroad  officials  will,  if  permitted,  arrange 
tariffs  in  the  interest  of  the  men  who  give  them  employ- 
ment, for  if  they  did  otherwise  their  services  would  soon 
be  dispensed  with.  A  freight  tariff  should  be  in  the 
nature  of  a  contract  between  the  carrier  and  the  shipper, 
and  the  assent  of  both  parties  ought  to  be  essential  to  its 
validity.  But  as  it  is  impracticable  for  all  the  parties  in- 
terested to  meet  for  the  purpose  of  effecting  an  agreement, 
the  pbwer  to  make  rates  has  in  several  States  wisely  been 
conferred  upon  railroad  commissioners,  and  there  is  a 
strong  tendency  in  others  to  adopt  the  same  policy.  Such 
boards  have  every  opportunity  to  obtain  any  information 
needed  for  the  efficient  and  faithful  discharge  of  their 
duties.  They  can  hear  the  representatives  of  the  railroads 
as  well  as  those  of  the  shippers,  investigate  carefully  dis- 
puted points,  summon  experts  and  witnesses,  and  obtain 
official  information  relating  to  classifications  and  rates 
from  every  State  in  the  Union,  and,  if  necessary,  from 
every  quarter  of  the  civilized  world.  The  assertion  may 
safely  be  made  that,  with  experience,  a  commission 
acquires  more  expert  knowledge  relating  to  the  business 
of  rate-making  than  a  railroad  manager.     If  there  is  any 


Thr  Rate  Q nsfiun.  385 


mysteiy  connected  with  the  business  of  rate- making 
which  has  so  far  been  in  the  sole  possession  of  railroad 
men,  it  is  to  their  interest  to  initiate  the  commissioners 
into  their  profound  secrets.  It  will  be  their  privilege  to 
enlighten  the  commissioners  as  to  the  actual  cost  of  their 
respective  lines,  the  cost  of  every  branch  of  the  railway 
service,  and  as  to  a  thousand  other  matters  which  the 
public  has  both  a  desire  and  a  right  to  know.  If,  after  a 
schedule  of  rates  has  been  prepared,  and  before  it  is  pro- 
mulgated, railroad  men  can  suggest  any  improvement  in 
it,  they  should  have  the  privilege  to  do  so;  or  if,  after 
giving  it  a  fair  trial,  they  should  be  prepared  to  show 
that  any  rate  is  unreasonably  low  and  injurious  to  them, 
their  complaint  should  be  carefully  investigated,  and,  if 
found  well  grounded,  the  wrong  should  at  once  be  righted. 

But  the  same  privileges  should  be  extended  to  ship- 
pers. Their  rights  and  their  welfare  should  be  guarded 
as  sacredly  as  those  of  the  railroad  companies.  They 
should  have  the  same  opportunity  to  examine  a  proposed 
schedule  before  its  promulgation  and  protest  against  any 
feature  of  it  which  they  may  regard  prejudicial  to  their 
interests,  and  their  statements  should  receive  the  same 
consideration  as  is  accorded  to  those  of  representatives  of 
the  railroad  companies.  So,  likewise,  when  shippers 
prove  to  the  satisfaction  of  the  commission  that  a  rate 
has  outlived  its  reasonableness,  their  complaints  should  at 
once  be  investigated,  and  if  their  cause  is  found  to  be  a 
just  one,  the  tariff  should  be  so  amended  as  to  give  them 
relief. 

The  labors  of  a  board  of  railroad  commissioners  are 
onerous,  and  their  responsibility  is  great.  No  uniform 
rule  can  be  laid  down  for  their  guidance  in  the  fixing  of 
rates,  yet  there  are  a  few  fundamental  principles  which 


380  Th<'  Rm'lr<iii(J  Question  . 


should  alwa3's  be  adhered  to.  The  cost  of  service  should 
invarialjl}'  Ije  an  important  factor  of  a  rate.  Railroads 
should  not  be  compelled  to  carry  any  commodity  for  less 
than  the  actual  cost  of  moving  it,  nor  should  rates  be 
fixed  greatly  in  excess  of  such  cost  of  service.  The  car- 
load should  be  the  unit  of  wholesale  shipments.  Since  it 
costs  the  railroad  company  as  much  to  move  ten  carloads 
of  freight  which  belong  to  one  shipper  as  it  costs  to  move 
ten  carloads  belonging  to  ten  shippers,  no  advantage 
beyond  the  general  car  load  rate  should  be  given  to  the 
large  shipper.  The  difference  in  the  rates  between  ship- 
ments in  less  than  carload  lots  ought  to  be  determined 
solely  by  the  difference  in  the  cost  of  carriage  and  handling. 
Where  shipments  are  made  in  carload  lots,  the  loading 
and  unloading  is  usually  done  by  the  shipper  and  con- 
signee, cars  are  loaded  to  their  full  capacity,  and  no 
loading  or  unloading  of  shipments  at  intermediate  points 
is  necessary.  It  is  therefore  but  just  that  the  consignor 
and  consignee  should  have  the  benefit  of  the  reduced  cost 
of  such  shipments.  Raw  materials,  and  especially  coal 
and  lumber  and  kindred  articles,  the  transportation  of 
which  requires  neitlier  an  expensive  rolling  stock  nor 
warehouse  accommodations  nor  speedy  movement,  and  in 
which  the  risk  of  loss  or  damage  is  insignificant,  should  be 
carried  at  the  lowest  rate  possible.  Such  a  policy  will 
tend  to  foster  other  interests,  which  will  develop  busi- 
ness for  the  road  and  will  build  up  remote  sections  of  the 
country,  and  will  often  enable  railroads  to  carry  large 
quantities  of  these  commodities  at  times  when  they  would 
otherwise  be  nearly  idle.  There  should  be  a  uniform 
classification  throughout  the  country,  based  upon  con- 
siderations of  justice  and  equity  instead  of  railroad  tradi- 
tion.   Such  articles  should  be  classed  together  as  resemble 


The  Rate  Question.  387 


each  other  as  concerns  bulk,  weight  and  risk,  or  what  is 
virtually  the  same,  cost  of  carrying  and  handling.  It 
may  be  safely  assumed  that  a  rate  which  has  been  made 
and  used  by  railroad  companies  is  remunerative.  If  it  is 
claimed  b}'  railroad  men  that  it  is  not,  the  burden  of 
proof  should  rest  upon  them.  A  rate  may  also  be  con- 
sidered remunerative  to  a  road  if  other  lines  similarly 
situated  have  A-oluntaril}'  adopted  it.  A  schedule  finally 
must  be  considered  reasonable  if  it  enables  the  company 
for  which  it  is  prescribed  to  earn  under  efficient  and 
economical  management  sufficient  to  maintain  its  road  in 
proper  condition  and  a  fair  rate  of  interest  upon  a  fair 
valuation  of  its  road.  Property  is  never  worth  more  than 
what  it  can  be  duplicated  for,  and  railroad  property  is  no 
exception  to  the  rule.  If  there  has  been  a  depreciation 
in  the  property  of  a  company,  it  should  not  demand 
.dividends  upon  values  which  no  longer  exist.  Nor  can 
the  same  returns  be  conceded  to  railroad  property  as  to 
private  capital.  Its  investment  is  permanent  and  well 
secured,  if  it  is  honestl}'  and  intelligently  made;  and  its 
dividends  are  net  returns  after  the  payment  of  all 
expenses,  including  taxes,  cost  of  management  and  main- 
tenance. The  three  per  cent,  bonds  of  the  United  States 
Government  find  a  ready  sale  at  prices  above  par.  Were 
there  less  speculation  and  more  honesty  and  stability  in 
railroad  management,  railroad  securities  yielding  a 
revenue  of  from  2|-  to  4  per  cent,  on  the  actual  invest- 
ment would  be  eagerly  sought  after  by  conservative 
capitalists. 

Rate-making  requires  honesty  of  purpose,  intelligence 
and  discretion,  qualities  as  likely  to  be  found  among  the 
servants  of  the  people  as  among  those  of  corporations.  A 
commission  may  err,  but  its  errors  are  not  likely  to  prove 


388  The  Railroad    Qncstiun. 

as  detrimental  to  the  railroad  companies  as  the  extortion- 
ate and  discriminating  rates  imposed  by  railroad  man- 
agers have  proved  to  the  interests  of  the  public.  Rail- 
road managers  acknowledge  no  obligation  except  that  of 
earning  dividends  for  their  companies,  while  the  members 
of  a  railroad  commission,  on  the  contrary,  are  responsible 
for  their  acts  to  the  people,  with  us  the  source  of  all  gov- 
ernment and  all  power.  To  question  the  justice  and  sin- 
cerity of  the  people,  or  to  deny  the  efficacy  of  such  a 
control,  is  to  deny  the  wisdom  of  popular  government. 

Railroads  might  be  permitted  to  reduce  their  rates 
below  the  official  tariff,  but  they  should  be  required  to 
give  at  least  thirty  days'  notice  of  such  a  change,  to  enable 
shippers  to  prepare  for  it.  The  companies  should  not  be 
permitted,  however,  to  raise  rates  again  without  obtain- 
ing the  commissioners'  consent  and  giving  at  least  two 
months'  notice  of  the  proposed  advance.  Sudden  fluc- 
tuations in  rates  are  a  fruitful  source  of  disaster  in  those 
branches  of  business  in  which  the  cost  of  transportation 
forms  an  important  factor  in  the  price  of  commodities, 
and  are  as  unjust  and  unwarrantable  as  would  be  fluctua- 
tions in  import  duties.  As  long  as  they  are  tolerated  there 
can  be  no  reliable  basis  for.  business  calculations  or  con- 
tracts. There  is  little  doubt  that,  were  such  regulations 
enforced,  railroad  wars,  so  demoralizing  to  the  business 
of  the  country,  would  soon  belong  to  the  things  of  the 
past,  and  a  far-reaching  assurance  of  future  welfare 
would  be  given  to  the  commercial,  manufacturing  and  all 
other  legitimate  interests  of  the  country.  It  should 
always  be  kept  in  view  by  the  rate-making  power  that  the 
railroad  company,  like  the  gas  company',  the  water  com- 
pany and  the  street  car  company,  is  acting  in  the  capacity 
of  a  public  agent,  and  the  rate  of  compensation  should  be 
fixed  by  public  authority. 


CHAPTER  XIV. 


REMEDIES. 


THE  railroad  iu  America  is  still  iu  its  iufancy,  both  as 
regards  extent  of  mileage  and  methods  of  operation. 
In  1860  the  United  States  had  in  round  numbers  30,000 
miles  of  road ;  in  1870  this  number  had  increased  to  53,000 ; 
in  1880  to  93,000,  and  in  1890  to  167,000.  It  will  thus 
be  seen  that  the  average  increase  during  each  of  those 
three  decades  was  nearly  80  per  cent.  Should  this  rate  of 
increase  continue  during  the  next  three  decades  there  would 
be  iu  the  present  territory  of  the  United  States  a  little  over 
three  hundred  thousand  miles  in  1900,  550,000  miles  in 
1910  and  close  to  one  million  miles  in  1920,  or  about  one 
mile  of  road  for  every  three  miles  of  territory.  It  is  not 
likely  that  the  rate  of  increase  of  the  past  will  continue  in 
the  future;  but  even  if  this  should  be  reduced  from  80  to 
40  per  cent,  it  would  be  less  than  fifty-five  3"ears  when  the 
railroad  mileage  of  the  United  States  would  reach  the 
million  point. 

Even  this  might  seem  an  extravagant  estimate,  but  it 
must  be  remembered  that  there  are  ali'ead}^  a  number  of 
States  in  the  Union  with  a  railroad  mileage  closel}'  ap- 
proaching this  proportion.  The  District  of  Columbia  has 
one  mile  of  road  for  everj^  3.39  square  miles  of  territorj-, 
New  Jersey  for  every  3.79,  Massachusetts  for  every  3.96, 
and  Connecticut  for  every  4.96  square  miles.  Ohio,  Penn- 
sylvania, Rhode  Island  and  Illinois  follow  with  one  mile 
of  railroad  for  every  5.14,  5.20,  5.57  and  5.59  square 
miles  of  territory,  respectively,  and  Indiana,  New  York, 
Delaware  and  Iowa  are  not  far  behind  them. 

389 


390  The   Railroad   Question. 

It  should  also  be  borne  in  mind  that  many  of  the 
through  lines  have  double,  some  triple,  and  some  even 
quadruple  tracks,  which,  if  taken  into  the  account,  would 
increase  the  mileage  much  more;  and  still  railroad  con- 
struction in  most  of  these  States  is  far  from  being  at  a 
standstill.  The  United  States  will  eventually  be  able  to 
sustain  a  closer  net  of  railways  than  any  country  in  Europe, 
and  we  may  rest  assured  that  the  time  will  come  when  the 
fertile  prairie  States  of  the  Noi'thwest  will  have  a  mile  of 
railroad  for  every  square  mile  of  territory. 

In  view  of  the  future  magnitude  of  the  transportation 
interest  the  importance  of  placing  its  control  and  manage- 
ment early  upon  sound  principles  should  not  be  under- 
estimated. Abuses  crept  into  railroad  management  in 
the  past,  not  because  the  men  who  controlled  it  were' 
necessarily  worse  than  men  engaged  in  other  pursuits, 
but  because  the  States  failed  to  provide  adequate  legisla- 
tion for  the  control  of  this  new  social  and  commercial 
force,  and  the  license  enjoyed  by  railroad  men  gradually 
turned  into  serious  evils  what  seemed  at  first  only  harm- 
less practices.  It  cannot  be  denied,  however,  that  the 
absence  of  restraint  in  time  attracted  to  the  business 
unscrupulous  men  whose  sharp  practices  frequently 
forced  their  colleagues  of  better  conscience  to  do  what 
their  sense  of  honor  and  justice  condemned.  These  evils 
and  abuses  have  increased  with  the  growth  of  the  railroad 
system,  and  nothing  short  of  the  sovereign  power  can  now 
correct  them.  It  is  incumbent  upon  the  state  not  only 
to  con-ect  the  evils  of  the  past,  but  to  base  legislative  con- 
trol of  railroads  upon  principles  so  wise  and  so  broad  as 
to  endure  for  ages,  permitting  the  unlimited  growth  of 
the  system  and  at  the  same  time  insuring  commercial 
liberty  and  prosperity  to  the  generations  to  come. 


Remedies.  391 

As  it  is  ahva3's  easier  to  tear  down  than  to  build  up, 
so  it  is  likewise  easier  to  point  out  evils  than  it  is  to  pro- 
vide proper  remedies  for  their  cure.  Almost  any  one  can 
criticise  existing  conditions,  but  it  requires  wise  and  con- 
structive statesmanship  to  propose  practical  measures 
which  will  bring  about  desired  improvement.  The 
apparent  magnitude  of  the  work  of  correcting  the  evils 
and  abuses  connected  with  the  transportation  business, 
many  of  which  have  been  in  vogue  for  more  than  a  gen- 
eration, has  discouraged  many  from  seriously  undertak- 
ing it.  And  yet  we  shall  find  the  problem  by  no  means  a 
difficult  one,  if  we  properly  analyze  it  and  go  to  the  root 
of  the  evil.  Prof.  Bryce,  in  his  work  "The  American 
Commonwealth,"  refers  to  the  fact  that  the  people  of  this 
country  have  been  equal  to  the  task  of  solving  the  grav^est 
problems  which  have  been  presented  to  them,  and  we 
need  have  no  doubt  of  their  abilit\"  to  solve  the  railroad 
problem.  Railroad  regulation  does  not  require  the  adop- 
tion of  any  new  principle  of  law.  If  the  common  law  is 
rightly  applied  and  provision  is  made  for  its  strict  and 
sj'stematic  enforcement,  it  will  meet  ever}^  condition  that 
is  likely  to  arise  in  the  transportation  business.  It  should 
always  be  remembered  that  the  railroad  is  an  improved 
highway,  and  the  principal  reason  for  which  it  is  built  is 
to  accommodate  the  people  and  promote  their  welfare, 
and  not  to  serve  the  selfish  ends  of  a  few  individuals,  and 
that  private  companies  were  permitted  to  build  and 
operate  it  onl}'  because  the  State  believed  that  the  public 
interests  could  best  be  served  in  this  way. 

It  is  one  of  the  duties  of  the  State  to  facilitate  trans- 
portation by  establishing  highways.  These  highways  may 
bo  built  by  the  State  directly  or  through  municipalities  or 
even  private  corporations.    Thus,  under  authority  derived 


392  Tlie  Railroad  Question . 

from  the  State,  cities  lay  out,  construct  and  maintain 
streets  within  their  limits.  But  these  streets  become 
public  and  are  always  subject  to  State  control.  The 
same  rule  applies  to  turnpikes  and  ferries.  Although  the 
State  transfers  to  an  individual  or  a  company  its  right  to 
maintain  a  ferry  or  to  build  and  maintain  a  turnpike,  and 
to  compensate  itself  for  its  outlay  by  the  collection  of 
tolls,  the  ferry  and  turnpike  nevertheless  remain  high- 
ways, subject  to  the  control  of  the  State. 

The  railroad  partakes  of  two  natures,  that  of  a  highway 
and  that  of  a  common  carrier.  Railroad  companies  there- 
fore enjoy  the  privileges  and  assume  the  duties  of  both. 
The  State  justly  exercises  in  behalf  of  such  companies  the 
right  of  eminent  domain,  i.  e.,  the  right  of  the  sovereign 
to  apply  private  property  to  public  use;  but  it  cannot 
rightfully  appropriate  private  property  for  private  use, 
even  if  legal  compensation  were  to  be  made  for  it.  It  is 
only  upon  the  theory  that  railroads  ai-e  highways,  con- 
structed for  the  public  good  and  subject  to  public  control, 
that  the  State  has  authorized  railroad  companies  to  take 
private  property  for  their  own  use  by  paying  for  it  a  rea-" 
sonable  compensation.  A  railroad  may  even  take  posses- 
sion of  and  intersect  a  public  road  for  the  purpose  of  car- 
rying on  its  functions.  But  while  the  sovereign  may 
exei'cise  the  right  of  eminent  domain,  it  cannot  delegate  it 
to  any  individual  or  number  of  individuals,  except  to  its 
agants,  performing  its  functions  and  being  bound  to  com- 
ply with  an}'  rule  which  may  be  prescribed  for  the  public 
good.  Under  the  common  law  the  individual  is  entitled 
to  as  full  use  of  the  railroad  as  he  is  of  the  common 
highway.  If  he  is  not  allowed  to  put  on  his  own  vehicle, 
this  restriction  is  simply  due  to  the  fact  that  the  people 
believe  that  the  business  can  be  done  most  safely,  most 


Remedies.  ^  393 

economically  and  most  efficiently  by  one  company  or  a 
limited  number  of  companies  operating  the  road  for  a  rea- 
sonable compensation.  Nor  does  this  restriction  differ 
materially  from  that  which  the  law  has  placed  upon  the 
use  of  the  common  road.  Without  legislative  sanction  no 
one  has  a  right  to  put  upon  it  a  team  of  elephants  or  a 
locomotive  and  train  of  cars,  or  other  strange  motors,  and 
thereby  obstruct  the  public  travel.  These  restrictions 
might  be  removed  by  the  legislative  power,  and 
there  is  also  no  doubt  that  under  the  common  law 
the  State  has  the  right  to  permit  the  independent 
use  of  the  railroad  track  by  any  person  having  motive 
power  and  cars  adapted  to  it.  The  persons  and  freight 
transported  on  the  railroad  are  taxed  to  maintain  it,  while 
in  the  case  of  the  common  road  this  tax  is  placed  upon 
the  people  and  the  adjoining  property.  How  to  collect 
the  tax  necessary  to  sustain  the  road  is  simply  a  question 
of  public  policy,  and  it  cannot  be  collected  in  any  case  ex- 
cept with  the  expressed  permission  of  the  State.  If  a  com- 
pany is  permitted  by  the  State  to  operate  a  railroad  it  shoul(i 
only  be  permitted  to  collect  such  tolls  as  are  just  and 
reasonable,  and  what  is  just  and  reasonable  should  be  de- 
termined by  the  sovereign  State,  and  not  by  the  operating 
company.  The  railroads  of  the  United  States  collect 
from  our  people  in  I'ound  numbers  a  transportation  tax  of 
eleven  hundred  million  dollars  annually.  This  tax  is 
equal  to  a  levy  of  $17  per  head,,  or  $85  per  family;  it  is 
about  as  large  as  all  our  other  taxes  combined.  In  the 
State  of  Iowa  it  amounts  to  about  $22  per  head,  or  $110 
per  family,  and  is  two  and  one-half  times  as  large  as  all 
the  State,  county,  school  and  municipal  taxes  collected 
within  her  borders. 

When  we  consider  how  thoroughly  other  public  charges 
are  hedged  about,  by  careful  restrictions  and   limitations, 


394  Till  Railroad  Qiwstion. 


and  with  what  caution  the  amount  to  be  collected  is  fixed 
after  thorough  public  discussion,  by  agents  of  the  people 
selected  by  them  to  serve  only  for  short  periods,  and  that 
those  who  collect  and  disburse  the  funds  are  under  oath 
and  bonds  for  a  faithful  performance  of  their  duty,  is  it 
not  preposterous  to  permit  agents  appointed  by  a  few 
interested  persons,  and  often  serving  for  a  long  term  of 
3^ears,  without  any  responsibility  to  the  public,  to  fix  the 
rate  of  this  tax,  and  to  collect  and  disburse  the  immense 
sums  levied  for  the  support  of  these  highways  without 
any  supervision  or  restraint? 

The  Government  might  as  well  lease  the  post-office, 
waterways  and  the  collection  of  import  duties  to 
the  highest  bidder  and  permit  the  lessees  to  reimburse 
themselves  by  the  collection  of  such  tolls  as  they 
might  see  fit,  without  any  governmental  restraint  what- 
ever, their  franchises  enabling  the  operating  companies  to 
tax  each  indi\idual,  each  locality  and  each  letter,  parcel 
or  article  as  they  saw  fit.  How  long  would  the  people  of 
this  country  endure  such  a  condition  of  things?  The 
collection  of  taxes  has  been  farmed  out,  but  not  by  any 
civilized  nation  in  modern  times.  History  shows  that  this 
system  of  taxation  has  always  been  productive  of  the 
gravest  almses,  and  prejudicial  to  the  public  welfare.  As 
has  already  been  shown,  the  railroad  is  an  improved  high- 
way, and  the  railroad  company  in  operating  it  is  doing  a 
public  business  and  not  a  private  business,  and  there- 
fore it  should  be  governed  by  rules  applicable  to  public 
business,  and  not  such  as  are  applicable  to  private  busi- 
ness. It  is  admitted  by  all  that  for  the  services  which  it 
performs  the  operating  company  should  receive  a  reason- 
able compensation ;  but  to  say  what  a  reasonable  compen- 
sation is,  how  it  shall  be  collected,  and  to  prescribe  rules 


/iriiici/ica.^  395 

regulating  the  business  of  the  public  carrier,  is  solely  the 
right  and  the  duty  of  the  State.  The  people  have  never 
permitted  the  rate  of  any  other  public  charge  to  be  fixed 
by  the  beneficiary.  Why,  then,  should  privileges  be  con- 
ceded to  one  beneficiary  which  are  dfenied  to  all  others? 

The  assertion  is  often  made  bj'  railroad  managers  that 
railroad  transportation  is  a  private  business  as  much  as 
any  other  branch  of  commerce.  It  is  not  likely  that  thase 
same  managers  would  wisli  to  have  their  argument  carried 
to  its  logical  conclusion,  for,  should  the  courts  at  any  time 
take  their  view,  they  would  be  under  the  necessity  of 
declaring  null  and  void  all  their  charters,  which  were 
granted  to  them  upon  the  assumption  that  the  railroad  was 
a  highway  operated  under  the  authority  and  control  of  the 
State  by  private  companies  for  the  puljlic  good.  If,  on 
the  other  hand,  railroad  managers  are,  for  their  own  pro- 
tection, forced  to  recognize  the  public  character  of  rail- 
roads, they  cau  no  longer  question  the  right  of  the  State  to 
so  control  their  business  as  the  public  good  may  demand. 
And  this  shows  the  absurdity  of  the  claim  often  made  by 
railroad  managers,  that,  as  long  as  the  rates  charged  by 
them  are  reasonable,  the  State  has  no  right  to  interfere 
with  their  business,  or,  in  other  words,  that  they  may  dis- 
criminate between  individuals  and  localities,  and  that  they 
may  legally  practice  a  thousand  other  abuses  as  long  as 
indi\'idual  shippers  find  it  be^'ond  their  power  to  prove 
that  they  have  been  charged  exorbitant  rates. 

Charles  Fisk  Beach,  Jr.,  in  his  "Commentaries  on  the 
Law  of  Private  Corporations,"  lays  it  down  as  a  general 
principle  of  law  that  "  whenever  any  person  pursues  a 
public  calling  and  sustains  such  relations  to  the  public  that 
the  people  must  of  necessity  deal  with  him,  and  are  under 
a  moral  duress  to  submit  to  his  terms  if  he  is  unrestrained 


396  The  Railroad    Question. 

by  law,  then,  in  order  to  prevent  extortion  and  an 
abuse  of  his  position,  the  price  he  may  charge  for  his  ser- 
vices ma}^  be  regulated  by  law."  And  applying  this 
principle  to  common  carriers,  and  especially  railroads,  this 
author  says:  • 

"The  sovereign  has  always  assumed  peculiar  control 
over  common  carriers  as  conducting  a  business  in  which 
the  public  has  an  interest,  and  in  the  case  of  railway 
carriers  an  additional  basis  of  governmental  control  is 
grounded  in  the  extraordinary  franchise  of  eminent 
domain  conferred  upon  these  companies.  For  corporations 
engaged  in  carrying  goods  for  hire  as  common  carriers 
have  no  right  to  discriminate  in  freight  rates  in  favor  of 
one  shipper,  even  when  necessary  to  secure  his  custom, 
if  the  discriminating  rate  will  tend  to  create  a  monopol}' 
by  excluding  from  their  proper  markets  the  products  of 
the  competitors  of  the  favored  shipper." 

If  railroads  had  no  obligations  or  advantages  beyond 
those  of  other  common  carriers,  such  as  stage  lines  and 
steamship  companies,  their  discriminations  might  be  less 
objectionable,  but,  as  keepers  of  the  toll-gates  of  the 
public  highways,  they  are  no  more  at  liberty  to  regulate 
their  own  business  regardless  of  the  public  welfare  than 
were  their  predecessors,  the  toll-collectors  stationed  along 
the  public  turnpikes  and  canals.  As  such  public  tax-col- 
lectors they  are  bound  to  give  equal  treatment  to  all  per- 
sons and  places. 

Although  the  business  of  constructing  and  keeping  in 
repair  the  turnpike  roads  was,  as  a  rule,  left  to  private 
persons,  and  the  promoters  of  such  enterprises  were  per- 
mitted to  reimburse  themselves  for  their  outlay  by  the 
collection  of  tolls,  their  schedules  of  tolls  were  prescribed 
by  the  State  and  their  business  was  placed  under  the 
supervision  of  public  officers,  whose  duty  it  was  to  see  that 
neither  extortion  nor  discrimination  ^as  practiced  in  the 


Remedies.  397 

coUectiou  of  these  tolls,  and  that  the  private  management 
of  a  public  business  did  not  become  the  source  of  abuse. 
The  State  thus  insisted  upon  exercising  a  restraining 
influence  over  the  business  of  turnpike  companies  because 
it  realized  the  danger  of  entrusting  the  management  of  a 
semi-public  business  to  companies  organized  solely  for 
private  gain,  with  officers  responsible  only  to  theh-  stock- 
holders, who,  under  ordinary  circumstances,  could  be 
relied  upon  to  measure  the  usefulness  of  an  employe  bj' 
his  ability  to  contribute  to  the  increase  of  the  annual  diAa- 
dends.  It  will  scarcely  be  claimed,  even  b}-  railroad  men, 
that  since  the  days  of  turnpikes  and  stage-coaches  cor- 
porations have  become  more  unselfish  and  their  officers 
less  servile.  The  temptations  have  increased,  while 
human  frailty  remains  the  same. 

Of  course,  if  we  consult  the  railroad  managers  as  to 
the  best  policy  to  be  adopted  for  the  future  control  of 
railroad  companies,  we  shall  be  informed  that  we  have 
already  gone  too  far  in  railroad  legislation,  that  nearly  all 
the  present  evils  of  transportation  of  which  the  public 
and  the  railroad  companies  complain  may  be  traced  to 
legislative  restrictions,  and  especially  to  certain  features 
of  the  Interstate  Commerce  Act.  They  reluctantl}-  admit 
that  this  act  has  been  instrumental  for  good  inasmuch  as 
it  has  corrected  some  of  the  abuses  that  formerly  existed, 
but  they  insist  that  several  of  its  provisions  are  too  radical 
and  do  infinitely  more  harm  than  good,  both  to  the  rail- 
road companies  and  the  people;  that  these  obnoxious 
provisions  ought  to  be  repealed,  and  that  under  such 
restrictions  as  would  still  remain  railroad  companies 
ought  to  be  permitted  to  manage  their  own  business.  If 
we  inquire  what  modification  of  the  Interstate  Commerce 
Act   the  railroads  desire,   we  find  that  if   the  act  were 


398  The  Hall  road  Question. 


amended  in  conformity  with  their  wishes  there  would  be 
little  of  it  left  that  is  of  value.  But  the  features  which 
are  specially  obnoxious  to  them  are  the  long  and  short 
haul  and  the  anti-pooling  clauses.  They  even  go  so  far 
as  to  demand  that  the  Government  should  not  only  permit 
pooling,  but  should  use  its  strong  arm  to  enforce  all 
pooling  contracts  which  railroad  companies  might  see  fit 
to  enter  into.  This  means,  in  other  words,  that  the 
Government  should  enforce  an  agreement  to  restrict  com- 
petition, which  is  made  in  direct  violation  of  the  common 
law,  and  aid  the  companies  in  maintaining  such  rates  as 
they  see  fit  to  establish.  If  the  railroad  manager  is  cross- 
examined  and  forced  to  confess  the  truth,  he  will  have 
to  admit  that  what  he  really  desires  is  freedom  from  all 
restraint,  or,  if  public  opinion  will  not  tolerate  this,  then 
only  law  enough  in  letter  to  satisf}'  a  public  clamor  and 
permit  him  to  violate  its  spirit,  and  to  then  trust  to  him 
and  the  future  to  bring  it  into  disrepute  and  cause  its 
repeal. 

Some  shrewd  managers  have  recently  expressed  a 
willingness  to  submit  their  pooling  arrangements  to  a 
public  commission  for  approval,  before  the}'  should  go  into 
effect.  This  is  objectionable  on  the  ground  that  they 
would  then,  more  even  than  before,  endeavor  to  control 
the  making  of  the  commission.  It  is  far  safer  to  abso- 
lutel}'  prohibit  pooling  and  all  devices  used  as  a  substitute 
for  it.  No  necessit}'  for  pooling  exists,  and  no  good 
reason  can  be  given  why  it  should  be  permitted  unless 
complete  government  control  is  established. 

State  control  of  railroad  transportation  is  as  essential  to 
the  welfare  of  the  companies  as  it  is  to  that  of  the  public. 
The  histor}'  of  the  past  twenty  years  has  shown  that  rail- 
road companies  are  utterly  unable  to  regulate  their  rela- 


RcmeiHes.  399 

tions  with  each  other.  They  either  cauiiot  arrive  at  an 
understanding,  and  then  the  stronger  companies  resort  to 
hostilities  to  bring  the  weaker  ones  to  their  terms ;  or,  when 
an  agreement  has  been  reached  among  them,  they  find 
themselves  unable  to  enforce  it.  Anarchy  then  reigns 
supremo,  until  finally  a  truce  is  patched  up,  to  be  again 
followed  by  evasions,  defiance  and  "war."  The  nature 
of  the  railroad  business  is  in  fact  such  that,  in  the  absence 
of  strict  State  control,  it  is  impossible  for  a  conscientious 
manager  to  retain  the  business  to  which  his  road  is 
naturall}'  entitled,  and  do  full  justice  to  both  the  patrons 
and  the  stockholders  of  his  road.  EflForts  have  been 
made  again  and  again  by  railroad  companies  to  regulate 
their  affairs  and  adjust  their  difficulties  by  resorting  to 
pools,  agreements,  associations  and  combinations,  formed 
with  all  the  ingenuity  of  which  men  are  capable,  and  sup- 
ported by  penalties  and  fines;  but  the  unscrupulous  rail- 
road manager  has  always  found  a  way  to  violate  or  sub- 
vert the  agreement.  '  There  is  a  disposition  among  rail- 
road companies  to  arrogate  all  the  powers  of  sovereignty. 
They  want  to  make  their  own  laws,  impose  fines  and 
declare  war,  and  often  go  even  so  far  as  to  openly  defj- 
the  power  of  the  State  that  has  given  them  their  exist- 
ence . 

When  railroad  managers  are  shorn  of  the  power  to 
practice  abuses,  they  are  at  the  same  time  deprived  of  the* 
many  advantages  they  now  have  to  speculate  in  railroad 
securities  and  emich  themselves  at  the  expense  of  the. 
public  and  of  other  railroad  stockholders.  The  great 
fortunes  of  this  country  have  been  amassed  within  a  few 
years,  and  chiefly  from  manipulations  of  railroad  property. 
If  the  people  permit  these  practices  to  go  on  without 
restraint  but  a  few  years  more,  the  property  of  the  nation 


400  The  RaUrund   Qncstlou. 


will  be  largely  under  the  control  of  a  few  bold  adven- 
turers. The  great  fortunes  of  Europe  which  it  has 
required  centuries  to  accumulate  are  already  outstripped 
by  the  "self-made"'  millionaires  of  this  country.  How- 
ever persistently  railroad  managers  may  assure  the  peo- 
ple that  abuses  in  the  transportation  business  have  been 
reduced  to  a  minimum  and  that  more  stringent  legislation 
will  be  an  evil,  it  is  a  fact  that  many  of  the  graver  rail- 
road abuses  are  still  practiced  and  that  much  more 
reformation  is  needed  in  railroad  management,  or  in  rail- 
road supervision,  or  in  both,  to  make  the  railroad  what  it 
was  designed  to  be,  a  highway  operated  for  the  public 
and  open  to  all  upon  equal  and  equitable  terms. 

The  virtual  ruler  of  the  United  States  is  public  opinion. 
It  is  the  power  that  controls  the  legislative  as  well  as 
the  executive  and  judicial  departments  of  the  Govern- 
ment. Enactments  of  legislatures  and  of  Congress  and 
decisions  of  the  courts,  even  of  the  Supreme  Court  of  the 
United  States,  not  in  harmony  with  an  intelligent  and 
determined  public  opinion,  cannot  endure,  and  executives 
not  in  accord  with  the  masses  of  the  people  cannot  long 
retain  public  confidence  or  official  authority. 

Under  these  circumstances  no  reform  movement  has 
any  prospect  of  success  unless  it  is  supported  by  public 
opinion.  It  should  therefore  be  the  principal  endeavor  of 
all  advocates  of  railroad  reform  to  create  public  opinion 
in  favor  of  the  measures  proposed  by  them.  With  an 
intelligent  public  on  the  alert,  the  Government  may  be 
relied  upon  to  pursue  a  healthy  and  progressive  railroad 
polic}'.  Unfortunatel}',  there  are  times  when  public 
opinion  upon  great  questions  is  dormant,  while  pecuniary 
interests,  like  the  force  of  gravity,  never  suspend  their 
action.     To  arouse  the  masses  at  such   times,  we  must 


Remedies.  401 

rely  largelj'  upon  an  honest,  independent  and  courageous 
press,  not  influenced  bj'  gift  or  patronage. 

Many  plans  have  been  proposed  for  a  better  control  of 
railroads.  Some  of  these  are  merelj^  theoretical;  others 
have  been  tried  in  part,  and  a  few  have  been  tried  in 
their  entirety,  but  under  circumstances  radically  different 
from  those  surrounding  us.  A  system  which  may  be 
well  adapted  to  a  monarchy  with  a  centralization  of  gov- 
ernmental powers  would  probably  prove  a  failure  here, 
when  brought  in  contact  with  the  principles  of  dual 
sovereignty  and  local  rule.  Unless  a  revolution  should 
change  our  system  of  government,  a  dual  system  of  rail- 
road control  will  always  be  necessary  in  the  United  States; 
for  it  is  not  at  all  likely  that  the  individual  States  will 
ever  voluntarily  give  up  their  right  to  regulate  commerce 
carried  on  within  their  respective  borders.  On  the  other 
hand,  the  common  welfare  requires  that  the  commerce 
which  is  carried  on  between  the  States  should  not  be 
hampered  by  local  interference,  but  should  be  regulated 
only  by  Congress.  Our  experience  as  a  nation  has  shown 
that  such  a  quality  of  sovereignty  is  not  inconsistent  with 
strength  or  efficiency,  nor  need  it  be  productive  of  rivalry 
or  friction.  The  fact  that  a  certain  mode  of  railroad 
management  has  been  successful  elsewhere  is  not  suffic- 
ient proof  that  it  would  be  successful  here,  nor  is  the  fact 
that  it  has  not  been  successful  elsewhere  sufficient  proof 
that  it  would  not  be  successful  here.  The  more  the  condi- 
tions which  exist  here  resemble  those  under  which  it  was 
tested,  the  greater  is  the  probability  that  it  can  be 
adapted  to  our  circumstances.  Independent  thought  and 
action  is  an  essential  element  of  progress,  yet  it  is  the 
part  of  wisdom  to  profit  b}'  the  speculation  and  experience 
of  others. 


402  The  RaUroaJ  Question. 


The  following  are  the  principal  methods  that  have  been 
tried  or  proposed  for  the  control  and  management  of  rail- 
roads : 

1.  Publicity  of  the  railroad  business. 

It  Is  held  by  some  that  the  secrecy  with  which  railroad 
business  is  at  present  transacted  is  the  source  of  all  evils. 
It  is  contended  that  if  railroads  were  required  to  report  to 
the  public  every  item  of  income  and  expenditure,  discrim- 
ination and  extortion,  as  well  as  bribery  and  corrupt  sub- 
sidizing, would  soon  cease.  If  the  companies  wore  com 
pelled  to  render  an  account  of  all  receipts,  special  rates 
and  drawbacks  could  not  safely  be  granted  l)y  railroad 
managers,  or,  if  granted,  would  soon  lose  their  chann  for 
recipient  ,  for  it  would  be  but  a  short  'ime  until  others 
would  demand  and  even  exact  the  same  privileges.  An 
attorne}'  would,  as  a  member  of  'the  legislature,  be  slow 
to  accept  a  retaining  fee  if  the  amount  of  such  fee  were 
made  known  to  his  constituents.  Publishers  would  hesi- 
tate to  apply  for  railroad  subsidies  if  the  companies  were 
compelled  to  render  periodically  an  itemized  account  of 
such  expenditures,  and  railroad  companies  would,  under 
similar  circumstances,  hesitate  to  pay  subsidies,  for  the 
subsidized  journal  would  soon  be  without  patrons.  If 
the  items  annually  expended  upon  railroad  lobbies  were 
reported,  these  lobbies  would  soon  be  frowned,  or  even 
hissed,  out  of  legislative  halls.  There  can  be  no  doubt 
that  full  and  complete  publicity  in  railroad  business 
would  correct  a  large  number  of  existing  abuses,  and  it 
should  therefore  be  insisted  upon  as  one  of  the  first  and 
essential  features  of  railroad  reform.  It  is  questionable, 
however,  whether  railroad  managers  are  so  sensitive  to 
public  opinion  that .  publicit}'  could  be  relied  upon  as  a 
cure  for  all  railroad  evils.      To  what  extent  it  is  dcsiiable 


R^'))U(/i>s.  403 

to  supplement  pulilicity  by  other  measures  of  State  con- 
ti'ol  will  be  considered  hereafter. 

It  will,  of  eourse,  be  urged  oy  railroad  managers  that 
the  Btate  lias  no  right  to  pry  into  the  privacy  of  their 
business  and  that  they  should  be  guaranteed  the  same 
protection  against  intrusion  that  is  enjoyed  by  other 
branches  of  business.  To  this  we  must  repl}*  that  not 
even  banks  or  insurance  companies  are  permitted  to  con- 
duct their  business  as  private,  and  that  controlling  the 
highway  and  levying  a  transportation  tax  upon  every 
article  of  commerce  passing  over  it  is  essentiall}^  pujjlic 
business  and  unquestionably  subject  to  public  control. 
Every  citizen  is  as  much  interested  in  it  as  he  is  in  the 
transactions  of  the  custom-house,  or  of  the  public  treas- 
ury, and  any  transaction  of  a  railroad  manager  that  shuns 
public  inspection  can  be  set  down  as  a  public  evil  and 
should  be  suppressed.  It  may  safely  be  laid  down  as  a 
general  rule  that  the  refusal  of  a  railroad  company  to  give 
publicity  to  its  transactions  is  presumptive  evidence  of 
wrong.  The  people  are  not  alone  interested  in  such  pub- 
licity. Stockholders  have  likewise  a  right  to  be  protected 
against  the  sinister  manipulations  of  dishonest  managers, 
and  publicity  furnishes  them  the  best  guarantee  of  hon- 
est management. 

Stockholders  should  attend  the  meetings  of  their  com- 
panies and  should  obtain  full  knowledge  of  the  manao-e- 
ment  of  their  atfairs.  If  they  will  make  thorough  ex- 
amination and  get  at  bottom  facts  the  chances  are  that 
contracts  will  be  found  with  owners  of  patents,  white  lines 
blue  lines,  refrigerator  car  lines,  coal  companies,  ferry 
companies,  manufacturing  companies,  packing  companies 
and  other  kindred  organizations,  by  which  hundreds  of 
millions  of  dollars  are  diverted  from  the  treasuries  of  the 


404  Tlir    lull'/ mad    Qncst'ivn. 


railroad  companies  to  the  pockets  of  influential  persons 
connected  with  the  management  of  the  roads. 

It  has  recently  come  to  light  that  the  officers  of  a 
Pennsylvania  railroad  company,  during  fifteen  years,  by 
some  means  of  secret  rebates  and  other  allowances,  have 
taken  about  $100,000,000  out  of,  the  treasury  of  the  com- 
pany and  distributed  it  as  largesses  to  about  half  a  dozen 
iron  and  steel  establishments. 

This  is  a  method  of  getting  wealthy  at  the  expense  of 
others  not  unknown  to  many  another  great  fortune 
accumulated  in  the  last  twent}^  years.  Railroad  discrimin- 
ations have  been  a  fruitful  source  of  those  gross  inequal- 
ities in  wealth  distribution  which  now  agitate  society  and 
call  people's  parties  and  the  like  into  existence.  The 
modern  millionaire  appears  to  be  an  entirely  natural 
creation.  Perhaps  this  money  taken  in  special  rates  from 
the  Pennsylvania  railroad's  treasur}-,  or,  rather,  from  the 
pockets  of  the  road's  other  patrons,  and  of  the  men  who 
may  have  sought,  without  special  rates,  to  compete  with 
the  favored  ones  in  their  business,  only  to  be  crushed  in 
financial  ruin,  will  be  spent  in  a  praiseworthy  way,  in 
accord  with  the  principles  of  "the  gospel  of  wealth." 
What  we  need  now  is  the  gospel  of  distribution  of  facili- 
ties for  the  accumulation  of  wealth,  as  well  as  the  gospel 
of  distribution  of  great  fortunes. 

Whether  inspired  by  a  bull  or  a  bear  interest  or 
neither,  all  will  concede  the  ability  of  Mr.  Henry  Clews 
to  picture  the  evils  of  railroad  management;  and  his  lack 
of  generosity  in.  accrediting  ability  or  honesty  to  legis- 
lators who  are  called  upon  to  provide  remedies  for  the 
wrongs  that  he  so  well  depicts  will  not  deter  me  from 
indorsing  the  following  statement  made  by  him  in  a 
magazint.'  article  which  is  pertinent  to  this  discussion: 


Ill  i)u'(/us.  -405 

'■  One  great  difficulty  that  present  railroad  legislators 
have  to  contend  with  is  the  evil  methods  of  railroad 
building  and  extension.  A  great  deal  of  the  mileage  of 
the  last  two  3'ears  has  been  premature,  and  doubtless  for 
speculative  purposes.  Most  of  it  has  been  constructed, 
however,  I13'  old  companies  who  had  good  credit  to  float 
bonds  and  could  raise  all  the  money  required.  Hence 
there  has  been  l)ut  little  financial  embarrassment  arising 
from  the  too  rapid  construction.  But  people  are  be- 
ginning to  find  out  that  a  great  deal  of  this  building  has 
been  in  the  interest  of  speculative  dii'ectors  and  their 
friends,  who,  for  a  mere  song,  had  bought  up  barren 
lands  considered  worthless  because  there  was  no  means 
of  transportation.  But  these  lands  soon  become  im- 
mensely valuable  for  sites  of  villages,  towns  and  cities. 
The  construction  companies,  by  which  these  roads  were 
generally  built,  raised  the  cost  to  the  highest  possible 
figures,  in  order,  I  fear,  to  make  dividends  for  the  con- 
struction stockholders.  It  is  noteworthy  that  the 
directors  connected  with  these  construction  schemes 
have  been  exceedingly  prosperous,  while  the  stockholders 
of  the  roads  have  grown  poor  in  an  inverse  ratio. 
The  dividends  of  the  latter  have  disappeared^  The 
new  mileage,  much  of  which,  I  apprehend,  has  been 
made  on  this  principle,  was  about  twenty-one  thousand 
miles,  which  is  greater  than  the  entire  mileage  of  Great 
Britain.  There  should  1  e  additions  to  the  Interstate 
Law,  or  a  special  law  regulating  the  methods  of  construc- 
tion companies,  which  are  probably  doing  more  to  de- 
moralize the  railroad  system — and  doing  it  very  insidi- 
ously, too — than  any  other  factor  connected  with  these 
great  arteries  of  the  country's  prosperity. 

'•  Legislative  reform  is  greatly  needed  in  the  matter  of 
railroad  reports,  especially  for  the  safety  of  investors,  and 
to  prevent  speculative  abuses  among  railroad  officials  uind 
their  friends  and  favorites.  There  should  be  statements 
issued  annually,  or  perhaps  more  frequently,  upon  the 
truth  of  which  everybody  might  rely.  These  should  be 
sworn  statements,  and  should  bear  the  signatures  of  at 
least  three  of  the  directors.     These  directors  should  be 


406  The   Railroad    Question. 


required  to  call  to  their  aid  expert  accountants,  and  should 
have  placed  at  their  disposal  all  the  books  of  the  company  or 
corporation  and  all  the  other  papers  necessary  to  verify 
the  accurac}'  of  their  report.  The  correctness  of  the  state- 
ment, when  issued,  would  then  l^e  a  foregone  conclusion,' 
and  an  investor  in  London,  Paris  or  Berlin  could  buy  or 
sell  on  his  own  judgment,  an  experiment  which,  under 
existing  arrangements,  might  prove  very  costly.  It  is 
proverbial  that  a  railroad  statement  now  is  defective  in 
the  most  essential  particulars,  and,  to  put  it  mildly, 
usually  covers  a  multitude  of  sins.  According  to  one  plan 
approved  by  railroad  companies,  the  statement  published 
to-day,  for  instance,  is  made  to  show  a  surplus  of  many 
millions,  but  there  is  nothing  said  about  an  open  construc- 
tion account  to  which  the  surplus  is  debtor.  On  this  favor- 
able showing  (with  this  sitjipns.'ilo  verl)  the  stock  goes  up 
and  the  insiders  quickly  unload  upon  the  investment  pub- 
lic. The  following  statement,  which  comes  out  six  months 
later,  shows  that  the  surplus  has  been  used  to  settle  the 
construction  indebtedness.  The  surplus  has  disappeared; 
consequently  the  stock  suffers  a  serious  decline.  Those 
who  bought  on  the  sti'cngth  of  the  large  surplus  sell  out, 
on  being  informed  of  its  distribution.  Then  the  inside 
sharks  come  forward  again  antl  purchase  at  reduced  prices, 
probably  at  a  depreciation  of  from  ten  to  fifteen  points 
or  more,  and  keep  their  stock  until  the  next  periodical  ap- 
pearance of  the  bogus  surplus.  Thus  the  insiders  grow 
rich,  while  the  outsiders  become  poor.  The  only  remedy 
for  this  abuse  is  a  sworn  statement  at  regular  intervals, 
and  if  the  directors  should  commit  perjury  they  would 
render  themselves  liable  to  State  prison.  If  a  few  of  them 
should  be  tempted  to  fall  into  the  trap,  and  be  made  ex- 
amples of  in  this  wa}',  nothing  would  do  more  to  work  a 
speedy  reform  in  this  contemptible  method  of  book-keep- 
ing- 

"I  would  also  suggest  a  change  in  the  character  of  the 
directors.  Those  usually  chosen  for  this  office  now  are 
men  who  have  vast  interests  of  their  own,  more  than 
sufficient  to  absorb  their  entire  time  and  thoughts.  They 
are  selected  mainly  on  account  of  their  high-sounding 


Remedies.  407 

names,  to  give  tone  to  the  corporation  and  solidify  its 
credit,  in  order  that  the  lambs  of  speculation  may  have 
proper  objects  in  vvliom  confidence  can  be  reposed  and  no 
questions  asked.  The  management  of  the  affairs  of  the 
corporation  is  frequently  intrusted  to  one  man.  who  i-uns 
the  business  to  suit  his  own  individual  interests.  ' 

We  can  appreciate  the  force  of  the  above  remarks  when 
we  consider  that  last  year  scA'entj'-five  companies  realized 
a  gross  income  of  $840,888,000,  which  is  equal  to  about 
80  per  cent,  of  the  total  income  received  by  all  of  the 
railroads  of  the  United  States. 

2.    Free  competition  ujyon  all  railroads. 

Mr.  Hudson,  in  his  excellent  work,  "  The  Railways  and 
the  Republic,"'  recommends  the  following  remedy: 

"Legislation  should  restore  the  character  of  public 
highways  to  the  railways,  by  securing  to  all  persons  the 
right  to  run  trains  over  their  tracks  upon  proper  regula- 
tions, and  by  defining  the  distinction  between  the  proprie- 
torship and  maintenance  of  the  railwa}'  and  the  business 
of  common  carriers." 

Mr.  Hudson  proposes  to  leave  the  track  in  the  posses- 
sion of  its  present  owners,  but  to  permit  any  iildividual  or 
company  to  run,  upon  the  payment  of  a  fixed  toll,  trains 
and  cars  over  it,  under  the  control  of  a  train-despatcher 
stationed  at  a  central  point.  This  train-despatcher  is  to 
be  notified  by  telegraph  of  the  movement  of  each  train, 
and  is  to  give  his  orders  to  the  officers  in  charge  of  eacli 
train,  as  to  what  points  they  are  to  go,  where  to  pass  one 
train  and  where  to  wait  for  another.  Each  transportation 
company  is  to  own,  load  and  forward  its  own  trains ;  it  is 
to  be  required  to  run  its  regular  train  on  schedule  time  or 
to  have  it  follow  another  train  as  an  extra.  They  are  to 
be  liable  to  their  shippers  as  w^ell  as  to  the  railway  com- 
pany for  all  damages  caused  by  their  neglect,  while  the 
railroad  company  is  to  l)e  held  responsilile  for  the  condi- 


408  TJie  Railroad   Question. 

tion  of  its  track.  It  will  not  be  necessary  to  go  into  the 
details  of  Mr.  Hudson's  plan.  Suffice  it  to  say  that  he 
proposes  to  establish  free  competition  in  the  railway 
business  by  making  the  use  of  the  railway  track  as  free 
as  that  of  the  turnpike  or  canal,  subject  only  to  such 
control  on  the  part  of  the  public  train-despatcher  as  the 
paramount  considerations  of  speed  and  safety  may  require. 
The  adoption  of  Mr.  Hudson's  plan  would  simply  be  a 
return  to  the  first  principle  of  railroad  transportation.  It 
has  already  been  shown  that  the  first  English  charters 
permitted  the  public  to  use  their  own  vehicles  and  motive 
power  upon  the  railroad  track,  but  that  shippers  and 
independent  carriers  could  not  avail  themselves  of  these 
provisions  of  the  early  charters  because  it  was  in  the 
power  of  the  railroad  companies  to  make  their  tolls  pro- 
hibitory. There  is  but  little  question  as  to  the  practica- 
bility of  Mr.  Hudson's  plan  from  a  purely  technical  stand- 
point, and  its  adoption  might  be  advisable  if  it  should  be 
demonstrated  that  a  monopoly  of  the  track  is  inconsistent 
with  the  operation  of  the  railways  for  the  public  good.  It 
is  seriously  doubted,  however,  whether  such  ideal  compe- 
tition as  Mr.  Hudson  desires  to  bring  about  could  be  se- 
cured except  at  the  expense  of  true  economy.  Concen- 
tration, or,  rather,  consolidation  in  the  railroad  business 
has,  under  proper  legal  restriction,  always  resulted  in  a 
sa^^ng  of  operating  expenses,  and  usually  in  a  reduction 
of  rates.  Any  step  in  the  opposite  direction,  whatever 
other  merits  it  may  possess,  is  in  the  end  not  likely  to 
give  lower  rates.  If  it  is  a  settled  principle  that  railroads 
are  only  entitled  to  a  fair  compensation  for  their  services, 
it  must  be  e\ident  that  what  would  be  a  fair  compensa- 
tion for  the  same  or  similar  services  to  a  large,  well- 
organized,    well-regulated    and    well-managed    company 


R,l)in/irs.  409 

cannot  be  sufficient  compensation  to  an  individual  car- 
rier or  a  small  company,  whose  expenses  will  always  be 
comparatively  larger  than  those  of  its  better-equipped 
rival.  Monopoly  and  extortion  need  not  necessarily  be 
sj'nonymous.  In  fact,  States  and  municipalities  in  their 
public  works  often  prefer  monopoly  to  competition  as  the 
cheaper  of  the  two.  Nevertheless,  should  it  ever  be 
found  that  monopolies  cannot  be  reconciled  with  justice 
and  economy,  a  return  to  the  first  principles  of  railroad- 
ing may  become  advisable. 

3.    State  oionershij)  and  management. 

A  number  of  European  states,  notably  Prussia,  France 
and  Belgium,  as  well  as  Australia,  British  India  and  the 
British  colonies  in  Southern  Africa,  have  adopted  govern- 
ment ownership  of  railroads.  The  motives  which  led  to 
this  step  in  the  various  countries  differ  greatly.  While  in 
Europe  military  and  political  considerations  predominated, 
in  Africa  and  Australia  it  was  more  the  want  of  private 
capital  and  energy  which  led  the  government  to  engage 
in  railroad  enterprises.  There  has  in  most  of  these  states 
been  a  desire  to  avoid  the  evils  usually  connected  with 
private  management.  The  experiment  of  state  ownership 
and  management  of  railroads  has  been  longest  tried  in 
Belgium,  and  with  the  best  results.  -With  an  excellent 
service  the  rates  of  the  Belgian  state  roads  are  the  lowest 
in  Europe.  Their  first-class  passenger  tariffs  are,  next  to 
the  zone  tariff  recently  adopted  on  the  state  roads  of  Hun- 
gary, the  lowest  in  the  world,  and  are,  for  the  same  dis- 
tance, lower  than  those  of  American  roads.  In  Prussia 
the  state  service,  upon  the  whole,  is  also  superior  to  that 
of  private  companies,  and  is  probably  equal  to  the  public 
demand.  In  France  the  government  only  owns  and  oper- 
ates less  important  lines,  but  furnishes  upon  these  a  more 


410  The  Railroad  Question. 

efficient  and  elieaper  service  than  private  companies  would 
eitlier  be  able  or  disposed  to  furnish.  The  oft-repeated 
statement  of  those  opposed  to  government  regulation  to 
the  coutrarj'  notwithstanding,  government  ownership  and 
management  of  railroads  is  a  decided  success  in  Europe, 
Mr.  Jeans  says  of  state  railroads: 

"  Notwitlistanding  the  superior  financial  result,  the 
lines  worked  by  the  state  are  those  kept  in  the  best  order, 
and  the  working  of  which  gives  the  greatest  satisfaction 
to  the  commercial  world  and  the  public  in  general  as 
regards  regularity  of  conveyance,  cheapness  of  transit  and 
the  comfort  of  travelers." 

It  is  difficult  to  see  how  any  unbiased  person  can  travel 
on  any  of  the  state  roads  of  Europe  without  coming  to 
the  same  conclusion.  State  management  offers  certainly 
some  decided  advantages  to  the  public.  Above  all,  the 
business  of  the  roads  is  not  conducted  for  the  pecuniary 
advantage  of  a  few,  but  for  the  common  good.  Commerce 
is  not  arbitrarily  disturlied  to  aid  unscrupulous  managers 
in  their  stock  speculations.  New  lines  are  not  built  for 
speculative  purposes,  but  for  the  development  of  the 
countr}'.  Rates  are  based  more  upon  the  cost  of  service 
than  upon  what  the  traffic  will  bear,  and  the  ultimate 
object  of  the  state's  policy  is  not  high  profits,  but  a 
healthy  growth  of  the  country's  commerce,  while  the  sole 
aim  of  a  private  compan}^  is  to  get  the  largest  revenue 
possible.  The  permanent  waj^  of  the  state  road  is  kept 
in  better  condition,  the  public  safety  and  convenience 
being  paramount  considerations.  Rates  are  stable  and 
uniform,  instead  of  being  changeable  and  discriminating, 
and  all  persons  and  places  are  as  equal  before  the  railroad 
tax  collector  as  before  the  law.  It  may  be  laid  down  as 
a  general  rule  that  under  private  management  of  railroads 
efl'orts  will  be  made  to  secure  the  highest  rates  possible. 


Remedies.  4  J 1 

while  it  is  the  aim  of  the  Government -to  grant  the  lowest 
rates  possible.  Mr.  Jeans  proves  by  statistics  that  the 
cost  of  maintenance  of  way  is  generally  higher  on  the  state 
lines,  and  that  traffic  expenses  are  higher  on  the  lines  of 
private  companies.  In  commenting  npon  this  difference 
he  says: 

-  "It  might  easily  be  contended,  and  even  proved  be- 
yond all  donbt,  that  the  first  characteristic  is  a  result  of 
the  better  condition  in  which  the  state  keeps  the  perman- 
ent way;  and,  so  far  as  this  is  the  case,  the  public  con- 
venience, safety  and  general  advantage  are'  promoted. 

"  The  highest  range  of  traffic  expenses  on  companies' 
lines  undoubtedly  argues  greater  laxity  of  management, 
since,  as  we  have  already  shown,  this  is  one  of  the  most 
elastic  of  items,  and  may  be  either  very  high  or  very  low, 
according  as  economy  or  extravagance  is  the  prevailing 
system ....  The  experience  of  Continental  Europe  points 
unmistakably  to  the  exercise  of  greater  economy  in  state 
management." 

Judge  Dillon,  of  the  United  States  Court,  in  his  order 
appointing  Hon.  J.  B.  G-rinnell  receiver  for  the  Central 
Railroad  of  Iowa,  in  1876,  said: 

' '  The  railroads  in  the  hands  of  the  court — and  in  the 
circuit  there  are  eight  or  ten — have  all  been  run  with  less 
expense,  and  have  made  more  money,  than  when  they  were 
operated  by  the  companies;  and  we  hope  and  believe  under 
your  supervision  that  this  road  will  prove  no  exception, 
and  that  the  property  will  be  worth  moi-e  at  the  end  of  the 
litigation." 

Upon  Mr.  Grinnell's  resignation,  after  nearly  three 
years  of  service,  Judge  Grant  said,  in  asking  for  the  dis- 
charge of  his  bondsmen : 

'  *  I  concur  entii-ely  in  the  opinion  of  the  State  commis- 
sioners that  he  has  very  much  improved  the  condition  of 
the  road,  and  he  left  it  in  far  superior  condition  to  that 
in  which  ho  received  it." 


412  Tlif    Railroad    Qurstion. 


Yet  Government  ownership  and  management  of  railroads 
also  has  its  drawbacks.  It  is  claimed  by  some  that  such 
managemwit  is  more  expensive  than  that  of  lines  owned 
by  private  companies.  It  has  already  been  shown  that  the 
permanent  way  is  kept  in  better  condition  by  the  state 
than  by  private  corporations.  In  Russia,  Germany, 
Austria-Hungary,  France  and  Italy  the  state  expends 
from  15  to  30  per  cent,  more  for  the  maintenance  of  the 
permanent  way  than  the  private  companies.  It  is  perhaps 
also  true  that  the  rank  and  file  of  railroad  employes  fare, 
on  an  average,  better  under  government  than  they  do 
under  private  management;  but,  as  an  offset  to  this,  it 
should  be  remembered  that  quite  a  saving  is  effected  by 
the  state  in  the  salary  account  of  general  officers.  The 
people  will  not  consent  to  pay  the  manager  of  a  railroad 
line  a  salary  six  times  as  large  as  that  of  a  cabinet  officer, 
and  provide  at  the  same  time  sinecures  for  his  sons, 
brothers,  nephews  and  cousins. 

It  is  furthermore  claimed  that,  as  government  is  organ- 
ized, it  cannot,  all  other  things  being  equal,  respond  to 
the  demands  of  commerce  as  promptly  as  private  com- 
panies. This  feature,  however,  may  be  an  advantage  to 
the  country  at  large  rather  than  a  detriment.  But  the 
strongest  argument  that  can  be  produced  against  state 
ownership  of  railroads  is  that  imder  a  democratic  form  of 
government  it  might  exert  a  demoralizing  influence  in 
politics.  The  1,700  railroad  companies  of  the  United 
States  have  at  present  an  arm}^  of  about  800,000 
employes.  This  number  is  constantly  increasing,  and  it 
is  more  than  probable  that  before  the  end  of  the  present 
century  it  will  have  reached  a  million.  When  it  is  con- 
sidered what  importance  is  at  present  attached  to  the 
political  influence  of  a  hundred  thousand  Federal  officers, 


Remedies.  413 

it  is  not  surprising  tliat  conservative  citizens  should 
hesitate  to  add  to  the  ranks  of  these  officeholders  a  six 
or  seven  times  larger  force.  Dangerous  as  the  railroad 
influence  now  is  in  politics,  it  would  be  ten  times  more 
dangerous  if  under  a  system  of  Government  management 
considerations  of  self-interest  should  induce  a  million  rail- 
road employes  to  act  as  a  political  unit  and  political 
parties  should  vie  with  each  other  in  bidding  for  the  rail- 
road vote.  Could  our  civil  service  ever  be  so  organized 
as  to  divest  it  entirely  of  political  power,  state  manage- 
ment of  railroads  might  still  ort'er  the  best  solution  of  the 
railroad  problem. 

Mr.  T.  B.  Blackstoue,  president  of  the  Chicago  and 
Alton  Railroad  Company,  has  recently  created  somewhat 
of  a  surprise  by  declaring  in  favor  of  Government  owner- 
ship of  railroads.  That  Mr.  Blackstones  programme  will 
eventually  receive  the  approval  of  a  large  number  of  his 
colleagues  there  can  be  but  little  doubt.  With  the  peo- 
ple wide-awake  upon  this  subject,  the  opportunities  for 
railroad  speculation  are  lessening,  and  the  scheme  to  early 
unload  the  railroads  of  the  country  on  the  Government  at 
a  highl}'  inflated  value  speaks  well  for  the  financial  far- 
sightedness of  its  author.  Mr.  Blackstone  proposes  to 
have  railroad  stockholders  do  here  what  the  former 
owners  of  the  telegraph  did  in  Great  Britain,  /.  e. ,  dis- 
pose of  their  property  to  the  Government,  at  a  price 
representing  several  times  its  original  cost  or  even  several 
times  the  cost  of  duplication. 

Mr.  C.  Wood  Davis,  formerly  general  freight  and 
passenger  agent  of  one  of  the  leading  roads  east  from 
Chicago,  is  one  of  the  best  informed  and  clearest-headed 
writers  upon  the  railroad  question.  He  has,  after  much 
experience  and  long  study,  been  converted  to  the  advocacy 


414  '      llie  Railroad  Qaestiun. 


of  national  ownership  as  a  solution  of  the  railroad  prob- 
lem. In  a  recent  article  published  by  the  Arena  Pul)lish- 
ing  Companj',  entitled  "Should  the  Nation  own  the 
Railway's  ?  "  he  presents  the  objections  and  advantages  of 
national  ownership.      He  says: 

'•The  objections  to  national  ownership  are  many,  that 
most  frequently  advanced,  and  having  the  most  force, 
being  the  possibility  that,  by  reason  of  its  control  of  a 
vastly  increased  number  of  civil  servants,  the  party  in 
possession  of  the  Federal  administration  at  the  time  such 
ownership  was  assumed  would  be  able  to  perpetuate  its 
power  indefinitely.  .  .  .  This  objection  would  seem  to  be 
well  taken,  and  indicates  serious  and  far-reaching  results 
unless  some  way  can  be  devised  to  neutralize  the  political 
power  of  such  a  vast  addition  to  the  official  army.  .  .  . 
In  the  military  service  we  have  a  body  of  men  that  exerts 
little  or  no  political  power,  as  the  moment  a  citizen  enters 
the  army  he  divests  himself  of  political  f mictions;  and  it 
is  not  hazardous  to  say  that  700,000  capable  and  efficient 
men  can  be  found  who,  for  the  sake  of  employment,  to  be 
continued  so  long  as  they  are  capable  and  well  behaved, 
will  forego  the  right  to  take  part  in  political  affairs.  If 
a  sufficient  numl^er  of  such  men  can  be  found,  this  objec- 
tion would,  by  proper  legislation,  be  divested  of  all  its 
force. 

' '  2.  That  there  would  be  constant  political  pressure  to 
make  places  for  the  strikers  of  the  party  in  power,  thus 
adding  a  vast  number  of  useless  men  to  the  force,  and 
rendering  it  progressively  more  difficult  to  effect  a  change 
in  the  political  complexion  of  the  administration. 

' '  That  this  objection  has  much  less  force  than  is 
claimed  is  clear  from  the  conduct  of  the  postal  depart- 
ment, which  is  unquestionably  a  political  adjunct  of  the 
administration;  yet  but  few  useless  men  are  employed, 
while  its  conduct  of  the  mail  service  is  a  model  of 
efficiency  after  which  the  corporate-managed  railways 
might  well  pattern.  Moreover,  if  the  railways  are  pat 
under  non-partisan  control,  this  objection  will  lose  nearly, 
if  not  quite,  all  its  force. 


Ri  iiuilicK.  415 

"3.  That  the  service  would  be  less  efficient  and  cost 
more  than  with  continued  corporate  ownership.  This 
appears  to  be  bare  assertion,  as  from  the  very  natiu-e  f)f 
the  case  there  can  be  no  data  outside  tlios(i  furnished  l)y 
the  government-owned  railways  of  the  British  c-olonies, 
and  such  data  negative  these  assertions;  and  the  advo- 
cates of  national  ownership  are  justified  in  asserting  that 
such  ownership  would  materially  lessen  the  cost,  as  any 
expert  can  readily  point  out  many  ways  in  which  the 
enormous  costs  of  corporate  management  would  be  les- 
sened. With  those  familiar  with  present  methods,  and 
not  interested  in  their  perpetuation,  this  objection  has  no 
force  whatever. 

"4.  That  with  constant  political  pressure  unnecessary 
lines  would  be  built  for  political  ends.  This  is  also  bare 
assertion,  although  it  is  not  impossible  that  such  results 
W'Ould  follow ;  yet  such  has  not  been  the  ease  in  the  Brit- 
ish colonies  where  the  governments  have  had  control  of 
construction.    .    .    . 

"5.  That,  with  the  amount  of  red  tape  that  will  be  in 
use,  it  will  be  impossible  to  secure  the  building  of  needed 
lines.  While  such  objection  is  inconsistent  with  the 
fourth,  it  may  have  some  force,  but  as  the  greater  part 
of  the  country  is  already  provided  with  all  the  railwaj's 
that  will  be  needed  for  a  generation,  it  is  not  a  very  seri- 
ous objection  even  if  it  is  as  difficult  as  asserted  to  pro- 
cure the  building  of  the  new  lines.  It  is  not  probable, 
however,  that  the  Government  would  refuse  to  build  any 
line  that  would  clearly  subserve  public  convenience,  the 
conduct  of  the  postal  service  negativing  such  a  suppo- 
sition.   .    .    . 

"6.  That  lines  built  by  the  Government  would  cost 
much  more  than  if  built  by  corporations.  Possibly  this 
would  be  true,  but  they  would  be  much  better  built  and 
cost  far  less  for  maintenance  and  betterments,  and  would 
represent  no  more  than  actual  cost;  and  such  lines  as  the 
Kansas  Midland,  costing  but  $10,200  per  mile,  would 
not,  as  now,  be  capitalized  at  $53,024  per  mile,  nor  would 
the  president  of  the  Union  Pacific  (as  does  Sidney  Dillon, 
in  Xha  Xorth  American   Review  for  April)  say   that      ''a 


416  77(6   Riiilnuu]   Qnrsli 


citizen,  simply  as  a  citizen,  commits  an  impertinence 
when  he  questions  the  right  of  a  corporation  to  capitalize 
its  properties  at  any  sum  whatever,"  as  then  there  would 
be  no  Sidney  Dillons  who  would  be  iM-esidents  of  corpor- 
ations, pretending  to  own  railways  built  wholly  from  Gov- 
ernment monej's  and  lands,  and  who  have  never  invested 
a  dollar  in  the  construction  of  a  property  which  they  have 
now  capitalized  at  the  modest  sum  of  $106,000  per 
mile.    .    .    . 

"7.  That  they  are  incapable  of  as  progressive  im- 
provement as  are  corporate-owned  ones,  and  will  not  keep 
pace  with  the  progress  of  the  nation  in  other  respects; 
and  in  his  Forum  article  Mr.  Acworth  lays  great  stress 
upon  this  phase  of  the  question  and  argues  that  as  a 
result  the  service  would  be  far  less  satisfactory. 

"There  may  be  force  in  this  objection,  but  the  evi- 
dence points  to  an  opposite  conclusion.  When  the  nation 
owns  the  railwa3's  trains  will  run  into  union  depots,  the 
equipment  will  become  uniform  and  of  the  best  char- 
acter, and  so  sufficient  that  the  traffic  in  no  part  of  the 
country  woidd  have  to  wait  while  the  worthless  locomo- 
tives of  some  bankrupt  corporation  were  being  patched 
up,  nor  would  there  be  the  present  difficulties  in  obtain- 
ing freight  cars  growing  out  of  the  poverty  of  corpora- 
tions which  have  been  plundered  by  the  manipulators, 
and  improvements  would  not  be  hindered  by  the  diverse 
ideas  of  the  managers  of  various  lines  in  relation  to  the 
adoption  of  devices  intended  to  render  life  more  secure  or 
to  add  to  the  public  convenience.  .  .  .  Existing  evidence 
all  negatives  Mr.  Acworth's  postulate  that  "state  rail- 
way systems  are  incapable  of  vigorous  life." 

"8.  An  objection  to  national  ownership  which  the 
writer  has  not  seen  advanced  is  that  wStates,  counties, 
cities,  townships  and  school  districts  would  lose  some 
$27,000,000  of  revenue  derived  from  taxes  upon  railwa3's. 
While  this  would  be  a  serious  loss  to  some  communities, 
there  would  be  compensating  advantages  for  the  public, 
as  the  cost  of  transportation  could  be  lessened  in  like 
measure. 

"  Many   believe  stringent  laws,   enforced  by  commis- 


Remedies.  417 

sions  haying  judicial  power,  will  serve  the  desired  end, 
and  the  writer  was  long  hopeful  of  the  efficacy  of  regula- 
tion by  State  and  National  commissions;  but  close  obser- 
vation of  their  endeavors  and  of  the  constant  efforts — too 
often  successful — of  the  corporations  to  place  their  tools 
on  such  commissions,  and  to  evade  all  lavvs  and  regula- 
tions, have  convinced  him  that  such  control  is  and  must 
continue  to  be  ineffective  and  that  the  only  hope  of  just 
and  impartial  treatment  for  railway  users  is  to  exercise 
the  '  right  of  eminent  domain, '  condemn  the  railways, 
and  pay  their  owners  what  it  would  cost  to  duplicate 
them ;  and  in  this  connection  it  may  be  well  to  state  what 
valuations  some  of  the  corporations  place  upon  their 
properties. 

' '  Some  years  since  the  Sante  Fe  filed  ,in  the  counties 
on  its  line  a  statement  showing  that  at  the  then  price  of 
labor  and  materials — rails  were  double  the  present  price — 
their  road  could  be  duplicated  for  $9,685  per  mile, 
and,  the  materials  being  much  worn,  the  actual  cash  value 
of  the  road  did  not  exceed  $7,725  per  mile. 

'•  In  1885  the  superintendent  of  the  St.  Louis  and  Iron 
Mountain  Railway,  before  the  Arkansas  State  Board  of 
Assessors,  swore  that  he  could  duplicate  such  a  railway  for 
$11,000  per  mile,  and  3'et  Mr.  Grould  has  managed  to 
float  its  securities,  notwithstanding  a  capitalization  of 
five  times  that  amount." 

Among  the  advantages  to  be  derived  from  Government 
ownership  he  names  the  following: 

"First  would  be  the  stability  and  practical  uniformity 
of  rates,  now  impossible,  as  they  are  subject  to  change  by 
hundreds  of  officials,  and  are  often  made  for  the  purpose 
of  enriching  such  officials.    ... 

' '  It  would  place  the  rate-making  power  in  one  body, 
with  no  inducement  to  act  otherwise  than  fairlv  and  im- 
jjartiall}^,  and  this  would  simplify  the  whole  business  and 
relegate  an  army  of  traffic  managers,  general  freight 
agents,  soliciting  agents,  brokers,  scalpers  and  hordes  of 
traffic  association  officials  to  more  useful  callings,  while 
relieving  the  honest  user  of  the  railway  of  intolerable 
burdens. 


418  Tlif   Railroad  Question. 


"Under  corporate  control,  railways  and  their  officials 
have  taken  possession  of  the  majority  of  mines  which 
furnish  the  fuel  so  necessary  to  domestic  and  industrial 
life,  and  there  are  few  coal  fields  where  they  do  not  fix 
the  price  at  which  so  essential  an  article  shall  be  sold, 
and  the  whole  nation  is  thus  forced  to  pay  undue  tribute. 

"  Controlling  rates  and  the  distribution  of  cars,  railway 
officials  have  driven  nearly  all  the  mine  owners,  who  have 
not  railways  or  railway  officials  for  partners,  to  the  wall. 

"With  the  (government  operating  the  railways,  dis- 
criminations would  cease,  as  would  individual  and  local 
oppression;  and  we  may  be  sure  that  an  instant  and 
absolute  divorce  would  be  decreed  Ijetween  railways  and 
their  officials  on  one  side,  and  commercial  enterprises  of 
every  name  and  kind  on  the  other. 

' '  The  failure  to  furnish  equipment  to  do  the  business 
of  the  tributary  country  promptly  is  one  of  the  greater 
evils  of  corporate  administration,  enabling  officials  to 
practice  most  injurious  and  oppressive  forms  of  discrim- 
ination, and  is  one  that  neither  Federal  nor  State  commis- 
sion pays  much  attention  to.  With  national  ownership  a 
sufficiency  of  cars  would  be  provided.  On  many  roads 
the  funds  that  should  have  been  devoted  to  furnishing  the 
needed  equipment,  and  which  the  corporations  contracted 
to  provide  when  they  accepted  their  charters,  have  been 
divided  as  construction  profits,  or,  as  in  the  case  of  the 
Santa  Fe,  Union  Pacific,  and  many  others,  diverted  to 
the  payment  of  unearned  dividends,  while  the  public  suffers 
from  this  failure  to  comply  with  charter  obligations. 

"There  would  be  such  an  adjustment  of  rates  that 
traffic  would  take  the  natural  short  route,  and  not,  as 
under  corporate  management,  be  sent  around  by  the  way 
of  Robin  Hoods  barn,  when  it  might  reach  its  destination 
by  a  route  but  two-thirds  as  long,  and  thus  save  the 
unnecessary  tax  to  which  the  industries  of  the  country 
are  subjected.  That  traffic  can  be  sent  by  these  round- 
about routes  at  the  same  or  less  rates  than  is  charged  by 
the  shorter  ones  i%  prinui  facie  evidence  that  rates  are  too 
high. 

"There   would  be  a  threat  reduction  in   the  number  of 


Remedies.  419 

men  employed  in  towns  entered  by  more  than  one  line. . 
For  instance,  take  a  town  where  there  are  three  or  jnore 
railways,  and  we  find  three  or  more  full-fledged  stafTs, 
three  or  more  expensive  up-town  freight  and  ticket  offices, 
three  or  more  sei)arate  sets  of  all  kinds  of  ollicials  and 
employes,  and  three  or  more  separate  depots  and  3'ards  to 
be  maintained.  Under  Government  control  these  stall's — 
except  in  ver}'  large  cities — woukl  he  reduced  to  one, 
and  all  trains  would  run  into  one  centrally  located  depot; 
freight  and  passengers  be  transferred  without  present 
cost,  annoyance  and  friction,  and  public  convenience  and 
comfort  subserved,  and  added  to  in  manner  and  degree 
almost  inconceival)le. 

"The  great  number  of  expensive  attorneys  now 
emploj^ed,  with  all  the  attendant  corruption  with  the 
fountains  of  justice,  could  be  dispensed  with,  and  there 
would  be  no  corporations  to  take  from  the  l)ench  the  best 
legal  minds,  by  offering  three  or  four  times  the  Federal 
salary.  .  .  . 

"Every  citizen  riding  would  pay  fare,  adding  immensely 
to  the  revenues.  Few  have  any  conception  of  the  pro- 
portion who  travel  free,  and  half  a  century's  experience 
renders  it  doubtful  if  the  evil — so  much  greater  than 
ever  was  the  franking  privilege — can  be  eliminated  other- 
wise than  by  national  ownership.  From  the  experience 
of  the  writer,  as  an  auditor  of  railway  accounts,  and  as 
an  executive  officer  issuing  passes,  he  is  able  to  say  that 
fully  ten  per  cent,  travel  free,  the  result  being  that  the 
great  mass  of  railway  users  are  yearly  mulcted  some 
thirty  millions  of  d©llars  for  the  benefit  of  the  favored 
minority;  hence  it  is  evident  that  if  all  were  required  to 
pay  for  railway  services  as  they  are  for  mail  services,  the 
rates  might  be  reduced  ten  per  cent,  or  more,  and  the 
corporate  revenues  be  no  less,  and  the  operating  expenses 
no  more.  In  no  other  countr}' — unless  it  be  under  the 
same  system  in  Canada — are  nine-tenths  of  the  people 
taxed  to  pay  the  traveling  expenses  of  the  other  tenth. 
By  what  right  do  the  corporations  tax  the  public  that 
members  of  Congress,  legislators,  judges  and  other  court 
officials  and  their  families  may  ride  free?     Why  is  it  that 


420  The  Railroad  Question. 

when  a  legislature  is  in  session  passes  arc  as  plentiful  as 
leavQS  in  the  forest  in  autumn?   ,   .    . 

' '  The  corporations  have  ineffectually  wrestled  with  the 
commission  evil,  and  any  number  of  agreements  have 
been  entered  into  to  do  away  with  it;  but  it  is  so 
thoroughly  entrenched,  and  so  many  officials  have  an 
interest  in  its  perpetuation,  that  they  are  utterly  power- 
less in  the  presence  of  a  sj^stem  which  imposes  great  and 
needless  burdens  upon  their  patrons,  but  which  will  die 
the  day  the  Government  takes  possession  of  the  railways, 
as  then  there  will  be  no  corporations  ready  to  pay  for  the 
diversion  of  traffic. 

"As  a  rule,  American  railways  pay  the  highest  salaries 
in  the  world  for  those  engaged  in  directing  business 
operations,  but  such  salaries  are  not  paid  because  trans- 
cendent talents  are  necessary  to  conduct  the  ordinary 
operations  of  railway  administration,  but  for  the  purpose 
of  checkmating  the  chicanery  of  corporate  competitors. 
In  other  words,  these  exceptionally  high  salaries  are  paid 
for  the  purpose,  and  because  their  recipients  are  believed 
to  have  the  ability  to  hold  up  their  end  in  unscrupulous 
corporate  warfare  where,  as  one  railway  president  ex- 
pressed it,   '  the  greatest  liar  comes  out  ahead. '  .   .   . 

' '  Government  control  will  enable  railway  users  to  dis- 
pense with  the  services  of  such  high-priced  umpires  as 
Mr.  Aldace  F.  Walker,  as  well  as  of  all  the  other  officials 
of  sixty-eight  traffic  associations,  fruitlessly  laboring  to 
prevent  each  of  five  hundred  corporations  from  getting  the 
start  of  its  fellows,  and  trying  to  prevent  each  of  the  five 
hundred  from  absorbing  an  undue  share  of  the  traffic.  It 
appears  that  each  of  these  costly  peace-making  attach- 
ments has  an  average  of  seven  corporations  to  watch.  .  .  . 

' '  With  National  ownership  the  expenditures  involved 
in  the  maintenance  of  traffic  associations  would  be  saved 
and  railway  users  relieved  of  a  tax  that,  judging  from  the 
reports  of  a  limited  number  of  corporations  of  their  con- 
tribution towards  the  support  of  such  organizations,  must 
annually  amount  to  between  $4,000,000'^and  $5,000,000. 

' '  Of  the  six  hundred  corporations  operating  railways, 
probal>ly   five   hundred  maintain   costly   general    offices, 


Remedies.  421 

where  president,  secretary  and  treasurer  pass  the  time 
surrounded  by  an  expensive  staff.  The  majority  of 
such  offices  are  off  the  lines  of  the  respective  cor- 
porations, in  the  larger  cities,  where  high  rents  are 
paid  and  great  expcMises  entailed,  that  proper  atten- 
tion may  be  given  to  bolstering  or  depressing  the  price 
of  the  corporations  shares,  as  the  management  may 
be  long  or  short  of  the  market.  So  far  as  the  utility  of 
the  railways  is  concerned,  as  instruments  of  anything  but 
speculation  such  offices  and  officers  might  as  well  be 
located  in  the  moqn,  and  their  cost  saved  to  the 
public.   .   .   . 

' '  Railways  spend  enormous  sums  in  advertising,  the 
most  of  which  National  ownership  would  save,  as  it 
would  be  no  more  necessary  to  advertise  the  advantages 
of  any  particular  line  than  it  is  to  advertise  the  advant- 
ages of  any  given  mail  route.  ...  A  still  greater  expense 
is  involved  in  the  maintenance  of  freight  and  passenger 
offices  off  the  respective  lines,  for  the  purpose  of  securing 
a  portion  of  competitive  traffic.  In  this  way  vast  sums 
are  expended  in  the  payment  of  rents  and  the  salaries  of 
hordes  of  agents,  solicitors,  clerks,  etc. ,  etc.  .  .  . 

"  Under  Government  control  discriminations  against 
localities  would  cease,  whereas  now  localities  are  discrimi- 
nated against  because  managers  are  interested  in  real 
estate  elsewhere,  or  are  interested  in  diverting  traffic  in 
certain  directions.  .  .  . 

' '  Another,  and  an  incalculable  benefit,  which  would 
result  from  National  ownership,  would  be  the  relief  of 
State  and  National  legislation  from  the  pressure  and  cor- 
rupting practices  of  railway  corporations,  which  constitute 
one  of  the  greatest  dangers  to  which  republican  institu- 
tions can  be  subjected.  This  alone  renders  the  nationali- 
zation of  the  railways  most  desirable,  and  at  the  same  time 
would  have  the  effect  of  emancipating  a  large  part  of  the 
press  from  a  galling  thraldom  to  the  corporations.  .  .  . 

' '  Estimated  net  annual  saving  to  the  public  which  would 
result  from  Government  control: 


422  The  Railroad  Question. 

From  consolidation  of  depots  and  staffs $20,000,000 

From  exclusive  use  of  shortest  routes 35.000,000 

In  attorneys"  fees  and  leg-al  expenses 12,000,000 

From  the  abrogation  of  the  pass  evil 30,000,000 

From  the  abrogation  of  the  commission  evil 20,000,000 

By   dispensing-   with   high-priced   managers    and 

staffs 4,000,000 

By  disbanding  traific  associations 4.000,000 

By  dispensing  with  presidents,  etc 25,000,000 

By  abolishing  all  but  local  offices,  solicitors,  etc. .    15,000.009 
Of  five-sevenths  of  the  advertising  account 5,000,000 

Total  savings  by  reason  of  better  administration  ^100,000,000 

"  It  would  appear  that,  after  yearly  setting  aside  $50- 
000,000  as  a  sinking  fund,  there  are  the  best  reasons 
for  believing  that  the  cost  of  the  railway  service  would  be 
some  $310,000,000  less  than  under  corporate  manage- 
ment. 

"That  $6,000,000,000  is  much  more  than  it  would  cost 
to  duplicate  existing  railways  will  not  be  questioned  by  the 
disinterested  familiar  with  late  reductions  in  the  cost  of 
construction,  and  that  such  a  valuation  is  excessive  is  mani- 
fest from  the  fact  that  it  is  much  more  than  the  market 
value  of  all  the  railway  bonds  and  shares  in  existence." 

The  above  quotations  from  Mr.  Davis'  article  hardly 
do  it  justice,  and  it  should  be  read  in  full  to  appreciate  its 
full  force.  Many  of  the  predictions  and  estimates  are 
undoubtedly  in  the  main  correct,  ^-et  upon  the  whole  it 
must  be  admitted  that  it  is  a  ratlier  rosy  and  too  hopeful 
view  to  take  of  Government  ownership  of  our  railroads. 

4.    ^tate  ownership  with  private  management. 

This  is  a  compromise  between  a  public  and  a  private 
system  of  railway  ownership  and  management.  It  is 
claimed  by  the  advocates  of  this  system  that  if  the 
Government  would  aquire  by  purchase  or  through  con- 
demnation proceedings  all  of  the  railroads  of  the  country, 
pay  for  them  by  issuing  its  bonds,  and  then  lease  the 
various  lines  to  the  highest  responsible  bidders,  prescrib- 
ing  a   scheduie   and    rules  of   management,  most  of  the 


RcmetUes.  423 

benefits  resulting  from  state  ownersliip  of  railroads  could 
be  secured  while  nearly  all  its  disadvantages  would  be 
avoided.  It  is  proposed  to  purchase  railroads  at  their 
actual  value  and  to  issue  in  payment  bonds  bearing  the 
same  rate  of  interest  as  other  Grovernment  securities. 
This  would  deprive  manag(n"s  of  every  opportunity  to 
manipulate  the  railroad  business  for  purposes  of  stock 
speculation.  It  would  also  reduce  the  fixed  charges  of 
our  railroads  at  least  50  percent.,  the  benefits  of  which 
reduction  the  public  would  chiefly  share.  The  acquisition 
of  the  railroads  by  the  Government  would,  moreover, 
afford  the  conservative  capitalist  a  safe  and  permanent 
investment,  which,  with  the  gradual  disappearance  of  our 
war  debt,  might  become  a  national  desideratum. 

It  is  proposed  by  the  advocates  of  this  system  that  the 
Government  fix  rates  of  transportation  for  a  certain 
period,  to  be  reviewed  at  the  end  of  that  period  upon  an 
agreed  basis.  The  operating  companies  would  be  required 
to  keep  their  roads  in  repair  and  give  sulttcieut  l.)onds  for 
the  faithful  performance  of  their  contracts.  [f  found 
guilty  of  persistent  violations  of  the  terms  of  their  leases 
or  of  such  laws  as  Congress  might  enact  for  their  control, 
their  bonds  and  leases  might  be  declared  forfeited.  A 
new  Government  department  or  bureau  would  have  to  be 
established  and  charged  with  the  duty  of  exercising  the 
same  control  over  railroads  which  the  Government  now 
exercises  over  national  banks,  and  in  addition  to  this 
complete  publicity  of  the  service  would  have  to  be  relied 
upon  to  prevent  the  introduction  of  abuses. 

There  are  at  least  two  valid  ot)jections  that  can  be  urged 
against  the  adoption  of  such  a  system.  Responsible  com- 
panies could  not  be  induced  to  lease  a  line  for  a  valid 
consideration  unless  their  rates  were  definitely  fixed  for  a 


424  Tht  Railroad   Question. 

series  of  years.  Such  a  course  might,  however,  in  time 
result  in  great  hardship  to  the  commerce  of  the  country, 
as  the  great  and  unavoidable  difference  in  the  rates  of  the 
various  railroad  lines  of  the  country  would  give  to  the 
commercial  interests  of  some  sections  decided  advantages 
over  those  of  others.  Besides  this  it  would  be  very 
difficult  to  compel  the  different  companies  to  keep  the 
lines  leased  by  them  in  repair.  Controversies  would  con- 
stantly arise  between  the  officers  charged  with  the  super- 
vision of  the  roads  and  the  operating  companies,  which 
could  be  ultimately  determined  only  by  the  courts,  causing 
to  the  Government  loss,  or  at  least  delay  in  the  adjust- 
ments. 

5.    National  control. 

Mr.  A.  B.  Stickney,  in  his  work,  ' '  The  Railway 
Problem,''  holds  that  in  the  interest  of  uniformity  it  is 
desirable  to  transfer  the  entire  control  of  railroads  to  the 
National  Grovernment.  He  assigns  two  reasons  for  the 
proposed  change;  one  being  that  Congress  would  con- 
sider the  subject  of  railroad  control  with  more  intelligence 
and  greater  deliberation ;  the  other,  that  ' '  the  problem  of 
regulating  railway  tolls  and  of  managing  railways  is 
essentially  and  practically  indivisible  by  the  State  lines  or 
otherwise,"  and  that  the  authority  of  Congress  to  deal 
with  interstate  traffic  carries  with  it  the  right  to  regulate 
the  traffic  which  is  now  assumed  to  be  controlled  by  the 
several  States. 

It  must  be  admitted  that  it  is  a  difficult  matter  to  draw 
the  line  of  demarcation  between  National  and  State  control, 
and  that  Congressional  regulation  of  railwa3-s  would 
remedy  many  evils  which  now  affect  our  transportation 
system;  yet  thei'e  is  reason  to  believe  that  the  proposed 
change  would  in  the  end  ))e  productive  of  more  evil  than 


f  Remedies.  425 

good.  It  is  aa  essentially  American  maxim  that  the 
home  government  only  should  be  trusted  with  the  admin- 
istration of  home  atfairs.  The  people  of  each  State  know 
best  their  local  needs,  and  it  is  safe  to  say  that  for  a 
generation  or  two  no  serious  effort  will  be  made  to  amend 
the  Federal  Constitution  in  this  respect  or  to  secure  from 
the  courts  an  interpretation  of  the  interstate  commerce 
clause  greatly  differing  from  that  which  now  obtains. 

It  is  thus  seen  that  nearly  all  the  methods  of  railroad 
management  which  we  have  discussed  are,  at  the  present 
time  at  least,  more  or  less  impracticable  on  account  of 
tne  radical  changes  which  they  would  necessitate.  It  'is 
not  likel}'  that  for  many  years  to  come  the  American  peo-« 
pie  could  be  induced  to  try  any  extensive  experiments  in 
state  ownership  of  railroads;  nor  is  it  any  more  likely 
that  the  present  generation  will  undertake  the  ditRcult 
task  of  separating  the  ownership  of  railroads  from  their 
operation. 

A  nation  is,  like  the  individual,  inclined  to  follow 
beaten  tracks.  It  finds  it,  as  a  rule,  easier  to  improve 
these  tracks  than  to  abandon  them  and  mark  out  a  new 
course.  Any  proposition  made  for  the  improvement  of 
our  sj'stem  of  railroad  transportation  is  in  the  same  pro- 
portion likely  to  receive  the  approval  of  the  masses  in 
which  it  makes  use  of  existing  conditions.  It  will, 
therefore,  be  my  aim,  in  making  suggestions  as  to  a  more 
efficient  control  of  this  modern  highway,  to  retain  what- 
ever good  features  the  present  system  possesses,  and  to 
only  propose  such  changes  as  may  seem  essential  to  restore 
to  the  railroad  the  character  of  a  highwa}-. 

As  has  been  indicated  above,  any  system  of  railway 
regulation,  to  be  applicable  to  our  circumstances,  must 
recognize  the  dual  sovereignty  of  Nation  and  State.     The 


42G  TI)r  Railroad  Quest io'ii. 


great  majority  of  our  railroad  corporations  were  originally 
created  by  the  State,  and  are  onl}-  responsible  to  the  State 
as  long  as  the}'  do  not  engage  in  interstate  commerce. 
Even  foreign  corpoi'ations  must  submit  to  all  police  regu- 
lations of  the  State  in  which  tliey  maj'  do  business,  and  as 
long  as  the  American  Constitution  remains  intact  the  indi- 
vidual States  will,  and  should,  assert  their  right  to  regu- 
late local  traffic  and  to  exercise  police  supervision  over  all 
railroads  crossing  their  boundaries. 

All  power  should  be  kept  as  closely  to  the  people  as  is 
consistent  with  efficieuc}'  in  the  public  service.  It  may 
even  be  questioned  whether  entire  transfer  to  the  Federal 
•  Government  of  the  supervisory  powers  now  exercised  by 
the  States  in  raih'oad  affairs  would  tend  to  correct  exist- 
ing railroad  evils  more  speedily  or  more  effectually  than 
they  can  be  corrected  through  the  agency  of  local  rule. 
The  conditions,  and  therefore  the  wants,  of  the  different 
States  differ  so  greatly  that  general  legislation  must 
always  fail  when  it  attempts  to  regulate  matters  of  merely 
local  concern. 

The  means  employed  by  the  State  foi-  the  regulation  of 
the  roads  under  its  jurisdiction  should  be  such  as  are 
least  likely  to  lead  to  a  conflict  with  Federal  authority, 
and  experience  has  shown  tliat  the  authority  of  the  General 
Government  and  that  of  an  individual  State  over  a  rail- 
road company,  which  is  incorporated  under  the  laws  of 
the  latter,  but  is  engaged  in  interstate  commerce,  ma}'  be 
so  harmonized  as  to  avoid  conflicts  between  the  two  sov- 
ereignties without  any  great  sacrifice  of  power  on  the  part 
of  either.  Judge  Cooley  said  recently  in  reference  to 
regulation  by  National  and  State  commissions: 

' '  There  is  no  good  reason  in  the  nature  of  things  why 
the  conformity  should  not  be  complete  and  perfect.     It  is 


lie  medics.  427 

remarkal)le  that  up  to  this  time  there  has  been  so  little — 
I  will  not  say  of  conflict,  but  even  of  diversity  of  action 
between  the  National  and  State  commissions.  Indeed,  I 
recall  no  instance  at  this  time  when  anything  done  liy  the 
one  has  seemed  to  me  to  afl'ord  just  i>round  for  complaint 
by  the  other.  This  may  justl}^  be  attributed  to  the  fact 
that  there  has  been  no  purpose  on  the  part  of  either  to  do 
any  act  that  could  afford  ground  for  just  complaint  on  the 
part  of  managers  of  the  business  regulated  and  no  desire 
to  do  anything  else  than  to  apply  rules  of  right  and  equal- 
ity for  the  protection  of  the  general  public.  The  aim  of 
all  regulation  ought  to  be  justice,  and  when  it  is  apparent 
that  this  is  the  purpose  of  the  several  commissions,  the 
railroad  managers  of  the  country  may  more  reasonably  be 
expected  to  cooperate  with  them  much  more  generally 
than  they  do  now.  If  these  managers  were  to  come  gen- 
erally and  heartily  into  more  full  and  complete  recogni- 
tion of  the  rules  of  right  and  justice  that  the  law  under- 
takes to  lay  down  for  the  performance  of  their  duties  in 
their  management  of  the  great  interests  they  represent, 
there  cannot  be  the  least  donljt  that  the  general  result 
would  be,  not  only  that  their  service  to  the  public  would 
be  more  useful  than  it  is  now,  but  that  the  revenues  de- 
rived from  their  business  would  be  materially  increased 
through  the  cutting  off'  of  namy  of  the  drains  upon  them, 
which  now,  while  affecting  injuriously  the  returns  they 
can  make  to  their  stockholders,  at  the  same  time  have 
the  effect  of  prejudicing  the  mind  of  the  general  public 
against  railroad  management  to  an  extent  quite  beyond 
what  is  generally  understood  by  those  who  suffer  from  it. 
The  prejudice  is  inevitable,  and  not  at  all  unreasonable 
when  it  is  seen,  as  it  very  often  is,  that  these  drains 
result  from  an  unjust  discrimination  against  the  public  or 
some  portion  thereof,  that  they  are  of  a  character  that 
ought  to  need  no  law  and  no  criminal  or  other  penalties  to 
put  them  under  the  ban  of  condemnation  in  every  office 
of  railroad  management. 

"I  take  the  libert}'  of  adding  one  more  thought:  that 
the  more  perfect  is  railroad  legislation,  the  less  we  shall 
hear  of   transportation   by  rail  being  made  a  Government 


428  The  Railroad   Question. 

function,  the  General  Government  making  purchase  of 
all  the  roads  and  entering  upon  a  course  which  will  lead 
we  know  not  whei'e  or  into  what  disasters. " 

There  has  been  during  the  past  twenty  years  a  tendency 
in  a  majorit}^  of  the  States  to  place  the  local  control  of 
railroads  in  the  hands  of  executive  boards,  usually  styled 
"railroad  commissioners."  Previous  to  this  period  the 
various  States  relied  solely  upon  legislation  for  the  regu- 
lation of  the  transportation  business,  but  in  time  they 
became  convinced  that  such  laws  were  inoperative  for  the 
want  of  an  enforcing  power.  It  was  found  that  the  indi- 
vidual shipper  was  unable  to  cope  with  a  powei-f  ul  com- 
pany and  usually  would  rather  suffer  wrong  than  to  enter 
into  a  contest  which  nearly  alwa\'s  resulted  in  great 
pecuniary  loss  to  him.  On  the  other  hand,  it  was 
apparent  that  if  the  claim  of  the  individual  were  pressed 
by  a  railroad  commission,  even  though  such  a  bod}'  had 
but  limited  powers,  it  would,  under  ordinary  circumstances, 
be  honored,  provided  it  was  meritorious ;  and  if  the  com- 
mission was  compelled  to  enforce  a  demand  through  the 
courts,  it  would  have  the  support  of  the  State  to  poise  the 
wealth  and  power  of  the  corporation. 

The  term  "  railroad  commissioner  "  in  the  United  States 
is  nearly  as  old  as  the  railroad  itself;  but  the  first  officials 
bearing  that  title  were  merely  successors  to  the  turnpike 
commissioners  of  yore;  their  duties  consisted  chiefly  in 
supervising,  passing  or  reporting  upon  the  construction 
and  condition  of  the  highway. 

The  first  railroad  commission,  in  the  present  accepta- 
tion of  the  term,  was  created  in  the  State  of  Massachu- 
setts, in  1869.  The  commission  consisted  of  three  persons, 
whose  principal  duty  was  to  ' '  make  an  annual  report  to 
the  General  Court,  including  such  statements,  facts  and 


R<')n((l!cs.  420 

explanations  as  will  disclose  the  actual  working  of  the  sys- 
tem of  railroad  transportation  in  its  bearing  upon  the  y 
business  and  prosperity  of  the  commonwealth,  and  such 
suggestions  as  to  its  general  railroad  policy,  or  any  part 
thereof,  or  the  condition,  affairs  or  conduct  of  an}^  railroad 
corporation,  as  may  seem  to  it  appropriate."  This  board 
also  had  the  general  supervision  of  all  railroads  and  power 
to  examine  the  same.  It  was  required  to  give  notice  in 
writing  to  any  railroad  corporation  which,  in  its  judg- 
ment, was  guilty  of  any  violation  of  the  railroad 
laws  of  the  State;  and  if  such  company  continued  the 
violation,  after  such  notice,  it  became  tlie  dut}^  of 
the  commission  to  present  the  facts  to  the  Attorne}'- 
General.  It  was  further  made  the  duty  of  the  board 
to  examine,  from  time  to  time,  the  books  and  ac- 
counts of  all  railroads,  to  see  that  they  were  kept  in  a 
uniform  manner,  and  upon  the  system  prescribed  by  the 
board.  It  was  also  required  to  investigate  the  cause  of 
any  accident  on  a  railroad  resulting  in  loss  of  life.  These 
being  the  principal  duties  of  the  board,  its  powers  were 
very  limited;  but  its  personnel  supplied  the  power  which 
the  law  had  withheld.  The  success  of  this  commissipn 
exceeded  even  the  expectations  of  the  advocates  of  the 
system,  who,  in  view  of  the  limited  powers  of  the  commis- 
sion, had  anticipated  but  meager  results. 

To  quiet  the  Granger  movement  the  railroads  favored 
and  finally  secured  the  adoption  of  the  commissioner  sys- 
tem in  the  West  and  South,  in  which  sections  it  attained 
its  highest  development.  It  was  soon  found  that  a  com- 
mission after  the  Massachusetts  model,  when  composed  of 
men  less  competent  or  less  disposed  to  do  their  duty,  was 
liable  to  dwindle  into  a  statistical  board  or  even  become  a 
pliant  tool  in  the   hands  of  the   railroads.      Furtliermore. 


430  Tlte  Railroad   Question. 

the  conditions  in  Massachusetts,  where  railroad  owners 
and  raih'oad  patrons  lived  side  by  side  and  were  in  many 
instances  even  identical,  differed  materially  from  those 
found  in  the  West  and  South,  where  railroad  patrons  were 
made  to  pay  excessive  rates,  to  produce  liberal  dividends 
on  fictitious  stocks  for  non-resident  stockholders.  Here  a 
conflict  between  the  railroads  and  such  commissions  as 
were  determined  to  do  their  duty  became  often  unavoid- 
able. Railroad  companies  were  as  a  rule  disposed  to  dis- 
regard the  recommendation  of  a  commission  to  reduce  ex- 
orbitant rates.  This  led  in  those  States  which  suffered 
most  from  unjust  taritTs  to  a  popular  demand  to  endow 
the  commission  with  the  power  to  fix  prima  facie  rates. 
While  the  number  of  States  which  have  taken  this  step  is 
at  present  still  limited,  public  opinion  in  its  favor  is  grow- 
ing throughout  the  nation,  and  a  general  adoption  of  this 
policy  is  probably  only  a  question  of  time.  There  is  every 
reason  for  believing  that  a  commission  vested  with  the 
right  to  fix  local  rates,  to  require  full  and  complete  reports 
from  railroad  companies,  and  to  make  proper  regulations 
for  their  control,  aided  by  penal  legislation  to  compel  com- 
pliance with  their  orders,  will  be  a  sufficient  aid  to  the 
State  in  exercising  such  control  over  the  companies  oper- 
ating lines  within  its  borders  as  its  dignity  and  the  wel- 
fare of  its  people  demand. 

Viewing  the  question  from  a  national  point  of  view,  we 
find  that,  owing  to  the  great  and  constantly  increasing 
importance  of  interstate  traffic,  improved  Federal  agencies 
for  railroad  control  are  a  pressing  need.  While  much  has 
been  accomplished  by  the  Interstate  Commerce  Act,  much 
yet  remains  to  be  done.  Violations  of  the  act  are  still  far 
too  frequent,  and  they  have  been  encouraged  by  unfriendly 
decisions  bv  some  of  the  inferior  Federal  courts. 


Remedies.  431 

It  must  be  admitted  that  nearly  all  the  evils  connected 
with  interstate  transportation  could  soon  be  remedied 
wore  it  not  for  the  difficulties  which  the  Interstate  Com- 
merce Commission  encounters  in  the  enforcement  of  the 
law.  On  the  one  haml  it  is  not  possible  with  the  machin- 
ery at  present  provided  to  detect  and  prove  a  considerable 
part  of  the  violations  of  which  railroad  managers  are  daily 
guilty;  and  on  the  other  hand,  if  these  violations  are 
brought  to  light,  there  would  not,  according  to  the  testi- 
mon}'  of  a  prominent  railroad  man,  be  courts  enough  in 
the  country  to  try  the  violators.  Besides  this,  such  is  the 
artfulness  of  railroad  managers  that  in  a  majority  of 
cases  it  would  be  impossible  to  reach  the  guilty  party, 
and  subordinates  would  have  to  answer  for  the  transgres- 
sions of  their  superiors. 

To  provide  adequate  machinery  for  the  supervision  of 
the  transportation  business,  a  national  bureau  of  com- 
merce and  transportation  should  be  established.  As  its 
chief  a  director-general  of  railroads  should  be  appointed 
by  the  President,  on  the  recommendation  of  the  Secretary 
of  the  Interior,  by  and  with  the  advice  and  consent  of  the 
Senate.  This  officer  should  hold  his  office  for  a  term  of 
at  least  six  3'ears,  unless  sooner  removed  by  the  Presi- 
dent, upon  reasons  to  be  communicated  by  him  to  the 
Senate.  He  should  not  be  interested  either  directl}'  or 
indirectly  in  railroad  securities.  The  Interstate  Com- 
merce Commission  should  be  continued  as  an  advisory 
board.  It  should  upon  the  whole  retain  its  present  func- 
tions and  should  be  consulted  Ijy  the  director-general  in 
all  matters  requiring  expert  investigation.  A  number  of 
divisions  or  sub-bureaus  should  be  established,  and  each 
should  be  entrusted,  under  the  supervision  of  the  director- 
general,  with  such  duties  as  may  be  deemed  necessary  to 
secure  the  greatest  efficiency. 


432  Thr   RnllnxKl   Qnrstlnn. 

There  should  be  a  division  charged  with  the  duty  of 
carefully  examining  and  compiling  the  detailed  reports 
which  the  various  companies  should  by  law  be  required  to 
make  to  the  bureau.  An  inspection  service  should  also 
be  established,  similar  to  that  now  maintained  by  the 
Treasury  and  Post-office  Departments.  Its  officers  should 
be  empowered  to  enter  all  railroad  offices  and  examine  the 
companies'  books,  board  trains  and  employ  other  legal 
means  to  detect  violations  of  the  railroad  law  and  report 
them  to  the  chief  of  the  bureau. 

Railroad  companies  might  be  permitted  to  make  inter- 
state rates,  but  all  schedules  should  be  submitted  to  the 
bureau  for  approval  or  revision.  Legal  provision  should 
be  made  against  every  sort  of  speculation  in  railroad 
stocks  on  the  part  of  railroad  officers,  who  should,  in 
addition,  be  prohibited  from  sharing  in  the  profits  of 
favorite  rates,  as  at  present.  All  executive  officers  and 
directors  of  railroad  companies  should,  like  officers  of 
national  banks,  be  required  to  qualify  by  taking  an  oath 
of  office,  and  should  be  held  to  strict  accountal^ility  for 
their  official  acts.  •  Officers  of  railroad  companies  should 
not  be  allowed  to  receive  and  use  proxies  at  stockholders' 
meetings. 

The  director-general  should  have  the  power,  when  he 
has  proof  that  a  railroad  manager  is  persistently  violating 
the  law,  to  remove  him  and  to  appoint  a  receiver  to  take 
charge  of  the  road  until  its  owners  can  make  provision 
and  furnish  sufficient  guarantee  for  a  more  responsible 
management.  Such  a  procedure  would  not  be  without 
analogy  in  the  sphere  of  Federal  authority.  The  Comp- 
troller of  the  Currency  is  authorized  by  law  to  remove  the 
derelict  officials  of  a  national  bank  and  place  its  business 
in  charge  of  a  receiver.     The  beneficial  effect  of  this  pro- 


RniHiJ  icK.  433 

vision  is  evinced  in  the  extreme  nireness  of  sucli  a  step. 
Wlien  railroad  managers  are  held  responsible  for  their 
own  official  acts,  as  well  as  for  those  of  their  subordin- 
ates, and  when  all  railroad  transgressions  are  visited 
upon  their  source  in  such  a  manner  as  to  be  remembered 
b}'  the  stings  of  disgrace  and  of  a  bliglited  career,  un- 
faithful railroad  managers  will  be  extremely  rare. 

The  plan  here  outlined  is  of  course  capable  of  being 
greatly  improved.  Experience  only  is  a  reliable  guide  as 
to  the  merits  of  the  various  details  of  such  a  system  of 
control.  "What  is  needed  above  all  things  is  a  beginning, 
the  establishment  of  the  principle  of  complete  control  of 
railroad  transportation  hy  the  State  and  the  Nation. 
When  this  step  is  once  taken,  the  friends  of  railroad 
reform  may  safely  trust  to  time  for  the  solution  of  the 
subordinate  questions  of  this  important  problem. 

By  thorough  State  and  Federal  supervision  of  the  rail- 
road business  many  of  the  present  abuses  can  be  pre- 
vented. But  the  temptations  of  railroad  managers  to 
violate  the  law  will  continue  to  exist  as  long  as  the  specu- 
lative element  is  permitted  to  remain  in  railroad  securi- 
ties. To  remove  the  fountain-head  of  the  evil  eventuallj'', 
the  way  should  gradually  be  paved  for  a  change  in  rail- 
road organization  and  ownership  which  would  also  greatly 
increase  the  responsibility  and  efficiency  of  railroad 
management.  In  the  beginning  of  the  railroad  era, 
nearly  all,  and  not  unf requently  all  the  capital  needed  for 
the  construction  of  a  new  line  was  supposed  to  be  fur- 
nished by  the  company's  stockholders.  But  as  it  often 
happened  that  the  cost  of  construction  considerably 
exceeded  the  original  estimate,  the  State  authorized  rail- 
road companies  to  mort,':agc  their  property  for  the  pur- 
pose of  raising  the  mo;i:^y  n  \!essary  to  complete  the  road. 


434  «    /'/"     ii'iilruinl    Question . 


In  time  this  provisiou  of  the  law  was  taken  advantage  of 
by  speculative  stockholders  to  such  an  extent  that  roads 
were  often  bonded  for  the  full  amount  necessary  to  con- 
struct them,  and  even  for  more,  wliile  the  stock  was  issued 
simply  as  a  bonus  to  the  promoters  and  the  bondholders 
of  the  road.  But  as  the  bonds  and  shares  scarcely  ever 
remain  in  the  same  hands,  such  a  condition  was  eventually 
brought  about  that  roads  were  controlled  by  those  who 
had  little  or  nothing  invested  in  the  enterprise,  and  their 
real  owners  were  deprived  of  all  influence  in  their  man- 
aarement,  retaining  onlv  the  ri«;lit  to  foreclose  their 
mortiraefes  when  thino-s  came  to  the  worst.  It  is  evident 
that  men  who  have  only  a  speculative  interest  in  property 
cannot  have  the  same  concern  for  its  permanent  value 
and  prosperity  as  those  who  hold  it  as  a  i>ermanent 
investment.  Many  of  the  railroad  abuses  of  the  past  had 
their  origin  in  the  law  permitting  the  bonding  of  railroad 
property.  Were  it  desirable  to  make  a  property  for  the 
sole  use  and  convenience  of  speculators  and  gamblers,  a 
better  scheme  could  hardly  he  devised  than  the  present 
system  of  our  railroad  organizations.  Were  railroad 
companies  organized  like  national  banks,  were  each 
shareholder  required  to  pa}'  the  full  amount  of  the  face 
value  of  his  shares,  and  were  mortgaging  railroad  prop- 
erty entirel}'  prohibited,  it  is  not  likely  that  the  propor- 
tion of  bankrupted  railroads  would  be  any  larger  than  that 
of  ])ankrupted  banks.  Few,  if  any,  railroads  would 
be  built  for  purely  speculative  or  blackmailing  purposes. 
Capital  is  naturally  conservative,  and  speculation  is  only 
invited  where  the  chances  of  gain  are  greatly  out  of  pro- 
portion to  the  capital  invested.  Were  the  principle  of 
ownership  which  applies  to  national  banks  and  other  well 
regulated   corporntions  silso  applied  to    the  railroads,  and 


Remedies.  435 

were  bonds  entirely  abolished,  only  such  persons  would 
l)y  the  shaivholdcrs  1)0  placed  in  charge  of  their  property 
as  could  give  to  them  the  best  assurance  of  honest  and 
consevvati\"e  managenient.  Sucli  a  change  wouhl  greatly 
increase  pul»lic  confidence  in,  and  the  value  of,  railroad 
securities,  and  would  eventually  place  them  above  bank 
stock  as  desirable  investments.  With  the  great  fluctua- 
tions which  under  present  circumstances  obtain  in  railroad 
stocks,  these  securities  are  regarded  as  unsafe  and  unsat- 
isfactor)^  Investments  by  conservative  people.  During  a 
period  of  less  than  twelve  months  in  1891  and  1892  the 
stock  of  the  Atchison,  Topeka  and  Santa  Fe  fluctuated 
from  28i^  to  43^,  or  53  percent.  ;  that  of  the  Chesapeake 
and  Ohio  from  15:^  to  25|^,  or  70  per  cent. ;  of  the  Chicago 
and  Northwestern  from  101  t-j  118,  or  17  per  cent. ;  of 
the  Chicago,  Saint  Paul,  Minneapolis  and  Omaha  from  20i^ 
to  38|^,  or  88  per  cent. ;  of  the  Chicago,  Milwaukee  and 
St.  Paul  fron  48f  to  78i-,  or  61  per  cent. ;  of  the  Iowa 
Central  from  6|-  to  13,  or  100  per  cent. 

If  we  look  over  the  stock  quotations  of  the  past  ten 
or  twelve  years  we  find  still  greater  fluctuations.  The 
following  table,  taken  from  the  United  States  Investor, 
shows  the  range  of  prices  of  a  few  of  the  principal  stocks 
during  this  period: 

Name.  Lowest.  Highei3t. 

Central  Pacific. 2Qy,  (1888) 102%  (1881) 

Chesapeake  and  Ohio 1       (1888) 33%  (1881) 

Erie 9}4  (1885) 52%  (1881) 

Illinois  Central 79>:^  (1879) 150^^  (1883) 

Lake  Erie  and  Western 1%  (1885) 65%  (1881) 

Michigan  Central 4Gi^  (1885) 130^  (1880) 

New  Jersey  Central 31       (1885) 131       (1889) 

New  York  Central 81%  (1885) 155?^  (1880) 

Northern  Pacific 14       (1884) .54 -Is'  (1882) 

Rock  Island 63?^  (1891) 204       (1880) 


436  The  Railroad  Question , 


Name  Lov/est.  Highest 

C,  M.  &  St.  P ZA%  (1879) l:.'9i4-  (1881) 

Texas  and  Pacific :>%  (1884) 73%  (1881; 

Wabash ^.   ;i       (1885) 60      (1881) 

Atchison  and  Topeka Oli^  (1890) 1531^  (18801 

Chicag'o.Bm-ling-t()nand(^iinL-y.  .75%  (1891 ) 1821^  (1881) 

N.  Y.  &  N.  E 9       (1884) '. .    8ti       (1881) 

Wisconsin  Central ;3       (1880) 39       (1881) 

Union  Pacific 28      (18S4) 131       (1881) 

And  such  fluctuation.s  liave  always  l>eeii  rather  the  rule 
than  the  exception.  It  is  a  gross  outrage  upon  the  in- 
vesting public  to  let  this  state  of  affairs  continue.  Tt 
should  be  corrected  without  delay. 

How  many  high  officials  in  charge  of  railroad  property 
will  under  these  circumstances  resist  the  temptation  to 
speculate  in  the  stock  of  their  companies,  and,  so  long  as 
it  is  permitted,  how  many  will  resist  the  temptation  to 
adopt  such  policies  in  the  government  of  their  roads  as 
will  cause  such  fluctuations?  It  is  a  common  report 
that  it  is  not  an  unfrequent  occurrence  for  Senators  and 
members  of  Congress  to  receive  information  from  railway 
officials  that  enables  them  to  raise  their  campaign  funds 
by  speculation  in  \Yall  Street. 

Mr.  Henry  C  Adams,  statistician  of  the  Interstate 
Commerce  Commission,  says  in  his  third  annual  report: 

' '  It  certainly  appears  .  .  .  that  the  motive  for  owner- 
ship in  railroad  stock  is  ([uite  different  from  thcf  ordinary 
motives  which  lead  men  to  invest  in  corporate  enterprises, 
thus  presenting  an  additional  proof  that  railways  are  a 
business  not  sul)ject  to  ordinary  business  rules."' 

There  is  no  safer  business  in  the  world  than  railroad 
transportation;  there  is  none  that  has  less  elements  of  un- 
certainty; none  whose  returns  in  the  aggregate  are  less  vary- 
ing. Every  other  business  in  the  country,  whether  pros- 
pering or  struggling,  i)ays  tribute  to  it.    It  rests  on  a  cash 


Rnncilu'x.  437 

basis,  and  suffers  proljably  less  from  hard  times  than  any 
business  of  its  magnitude.  Both  tlie  merchant  and  the 
manufacturer  run  large  risks  in  doing  lousiness  largely  on 
a  credit  basis.  The  farmer  sows  in  the  spring,  harvests 
in  the  fall,  and  often  cannot  realize  on  his  products  until 
winter;  but  the  railroad  company  always  receives  its  pay 
as  soon  as  its  work  is  done,  and  not  unfn'C}uently  even 
before  it  is  done.  Statistics  show  that  railroad  revenues 
are,  iu  the  aggregate,  remarkably  uniform,  and  there  is  no 
reason  why  railroad  securities  should  be  less  stable  than 
bank  or  insurance  stocks.     Mr.  Jeans  says: 

<<  It  is  observable,  in  respect,  to  the  net  profits  from 
railway  working,  that  they  have  not  fluctuated  from  yeax 
to  3'ear  in  the  same  way  as  nearly  all  other  profits  have 
done.  ...  It  comes,  then,  to  this,  that,  next  after  land 
and  house  property,  the  railway  interest  is  the  largest  and 
most  important  in  the  country.  But  it  is  superior  to  both 
of  these  rival  interests  in  its  profit-earning  capabilities, 
yielding,  as  it  does,  more  than  4  per  cent,  on  the  capital 
expended,  against  a  possible  average  of  2,h  to  3  per  cent, 
in  respect  to  the  others. " 

There  may  be  some  arguments  in  favor  of  bonding 
railroads,  but  this  practice  is,  upon  the  whole,  productive 
of  infinitely  more  evil  than  good.  The  State  sliould, 
therefore,  compel  railroad  companies  to  liquidate  all  of 
their  bonded  indebtedness  without  unnecessar}'  delay.  In 
the  proportion  in  which  this  is  accomplished  railroad 
shares  will  gain  in  stability  and  value. 

Railroad  men  complain  that  the  small  savings  of  the 
poor  invested  in  railroad  securities  do  not  jield  adequate 
returns  and  are  often  lost  in  consequence  of  the  foreclos- 
ing of  the  roads  in  which  these  investments  have  been 
made.  Others  complain  that  railroads  are  bankrupted  in 
the  interest  of  designing  bondliolders.    Still  others  charge 


438  Tim  Railnxid    Qaestiou. 

that  rich  and  powerful  roads  contrive  to  obtain  a  control- 
ling interest  in  the  depreciated  stock  of  weaker  roads  and 
then  manage  these  roads  in  their  own  interest  and  greatly 
to  the  detriment  of  other  stockholders.  All  these  evils 
would  disappear  if  the  law  required  the  identit}^  of  actual 
and  virtual  ownership.  "  Freezing-out  "  processes  could 
no  longer  be  resorted  to  by  expert  directors  to  obtain 
without  compensation  the  property  of  their  less  sophisti- 
cated fellow  stockholders.  One  railroad  could  no  longer 
obtain  control  of  another  by  acquiring  an  insignificant 
part  of  the  sum  total  of  its  securities.  There  would  be 
no  longer  any  clashing  between  the  interests  of  bond- 
holders and  stockholders,  and  railroads  would  no  longer 
be  managed  in  the  interest  of  a  small  minority  of  their 
owners. 

In  addition  to  the  cancellation  of  all  raih'oad  mortgages 
the  State  should  require  that  all  railroad  stocks  should,  in 
the  future,  be  paid  in  full.  Furthermpre,  roads  should 
be  built  only  from  the  proceeds  of  the  capital  stock,  and 
the  expense  of  repairs  should  be  defraj'ed  from  the  reve- 
nues of  the  road.  Dividends  should  only  be  paid  from 
surplus  earnings  and  should  in  no  case  exceed  a  fair  rate 
of  interest  on  the  actual  present  value  of  the  road.  The 
statistician  to  the  Interstate  Commerce  Commission  sug- 
gests the  creation  of  a  special  commission  charged  with 
the  duty  of  converting  the  actual  capitalization  of  railroad 
lines  into  a  just  value  of  their  property.  To  do  justice  to 
both  the  railroads  and  their  patrons  in  the  fixing  of  rates, 
it  is  important  that  the  just  value  of  railroad  property  be 
ascertained,  but  the  work  could  probably  be  done  with 
less  friction  by  a  cooperation  of  National  and  State  com- 
missions. A  number  of  reforms  are  needed  within  the 
province  of  railroad  management.  Passenger  rates  are, 
as  a  rule,  too  high,  and   out  of  all  proportion  to   freight 


•     lirnicdiis.  439 

rates.       Mauy  passenger    tariffs   still    recognize  the   old 
stage-coucli  principle  of  fixing  the  fare  in  an  exact  pro- 
portion to  the  distance  traveled.      Thus   a  passenger  who 
takes  the  train  for  a  five-mik;  trip  paj's  only  fifteen  cents 
for   his    own    transportation    and    that   of    one  hundred 
pounds   of    baggage,    while   the    passenger   who  buys    a 
ticket  for  a  journey  of  one  hundred  miles  pays,  on  most 
American  lines,  exactly  twenty  times  the  amount  paid  by 
the  five-mile  passenger.      Here  the  principle  of  collecting 
terminal  charges  is  entirely   ignored.      Sufficient   induce- 
ments are  not  held  out    to  the   passenger    to    prolong  his 
journey,  and  as  a  conseipience  of  this  sliort-sighted  policy 
of  the  railroad  companies  the  average   distance  traveled 
in  the  United  States  by  each  passenger,  instead  of  having 
gradually  increased,  has  gradually  decreased  of  late  years 
until   it  is   now  only  24.18   miles.      The  average   freight 
haul  in  the  United  States  is  120  miles,  or  about  five  times 
as  long  as  the  average  journey  per  passenger.      How  can 
such  a  difference   be  accounted  for  except    bj^   the   dis- 
similarity in  the  principles  which  govern  the  computation 
of  passenger  and  freight  charges?     The  same  rule  should 
be  adopted  in  fixing  passenger  rates  that  is  recognized  by 
railroad  men  in,  fixing  freight  rates:   the  rate   per   mile 
should  decrease  with  the  increase  of  the  number  of  miles 
traveled. 

The  principle  of  arranging  passenger  tariffs  on  a  sliding 
scale  has  found  recognition  in  Europe.  In  Denmark 
first-class  passenger  fare  is  3.13  cents  for  each  of  the 
first  47  miles,  2. 67  cents  for  each  of  the  next  47  miles, 
and  only  2. 22  cents  for  every  additional  mile.  The  prac- 
tical application  of  this  principle  is,  in  fact,  only  limited 
by  the  extent  of  the  kingdom.  In  nearly  all  European 
countries  a  uniform  reduction,  ranging  from  20  to  30  per 
cent. ,  is  made  from   regular  rates   for  return   trip  tickets, 


440 


Tlw  Railroad  Question. 


and  coupon  tickets  are  issued  to  tourists  almost  every- 
where at  largely  reduced  rates. 

Hungar}^  recentl}^  adopted  a  new  method  of  making 
passenger  and  freight  tariffs  for  its  state  lines.  This  is 
now  generally  called  the  zone  system.  There  are  two 
classes  of  tickets  sold,  one  for  short  trips  on  suburban 
or  branch  lines,  the  other  for  longer  journeys  on  the 
main  lines.  The  distances  that  can  be  traveled  on  short 
or  suliurban  lines  are  divided  into  two  zones  of  stations, 
and  those  on  main  lines  into  fourteen  zones.  The 
division  of  the  kingdom  into  zones  is  made  with  Buda- 
Pesth  as  the  center.  A  ticket  purchased  for  a  particular 
zone  carries  the  passenger  to  the  end  of  that  zone  or  any 
nearer  station. 

The  following  table  will  show  the  extent  of  each  zone 
and  the  fares  paid: 


DiSTAKCE. 

Local  Trains. 

Fast  Trains. 

Zone. 

'X.  to 

fey 

a  !B 

0   IC 

t-  to 

Eh5 

I 

O  CO 

J'  =3 

Short  Lines. 

First  Station 

Second  Station 

1-  25  km 

Fl. 
0.30 
.40 

.50 
1.00 
1.50 
2.00 
2.. 50 
3.00 
3.50 

4.  CO 
4.. 50 
5.00 

5 .  50 

Fl. 
0.15 
.22 

.40 
.80 
1.20 
1.60 
2.00 
2.40 
2.80 
3.20 
3.60 
4.00 
4.40 

Fl. 
.10 
-.15 

.25 

.50 
.75 
1.00 
1.25 
1.50 
1.75 
2.00 
2  25 

Fl. 

Fl. 

Fl. 

Main  Lines. 
1 

0.60 
1.20 
1.80 
2.40 
3.00 

0.50 
1.00 
1.50 
2.00 
2.50 

0.30 

2 

3 

4 

5 

26-40     "     

41-55     "     

56-70     "     

71-85     "     

86-100     "     

101-115     '•     

116-130     "     

131-145     "     ;.. 

146-160     "     

161-175     "     

.60 

.90 

1.20 

1.50 

6 

7 

8 

9 

3 .  60  3 .  00 
4.20  3.50 
4.804.00 
5  .  40  4 .  50 

1.80 
2.10 
2.40 
2.70 

10 

11 

2.50  6.00  5.00|3.00 
2.75  6.60  5.50  3.30 

12 

13 

176-200     "     

201-225     "     

225  km.  and  over.  . . 

6.01/ 
7.00| 
3.00 

4.80 
5.30 
5.80 

3.00  7.20  6.00  3.60 
3.50  S.4nifi.5o!4.20 

'' 

4.0()j 

9.60, 

7.00 

4.80 

Remedies.  441 

(The  florin  is  a  little  more  than  one-third  of  a  dollar. ) 

A  ride  from  a  city  to  the  lirst  suburban  station  costs 
from  3  to  10  cents,  according  to  class  of  car,  and  to  the 
second  station  5  to  13.  G  cents.  On  through  trains  a  person 
may  travel  15  miles  at  a  cost  of  from  8^  to  20  cents,  accord- 
ing to  kind  of  train  and  class  of  car,  a  hundred  miles  for 
from  85  cents  to  $2.00  ;  140  miles  for  from  $1.15  to  $2.80 
and  any  distance  above  140  miles  for  from  $1.35  to  $3.25. 
A  person  may  thus  travel  from  Buda-Pesth  to  Predeal,  a 
distance  of  472  miles,  with  a  third-class  ticket  for  zone  14, 
purchased  at  a  cost  of  $1.35,  or  28-100  of  a  cent  per  mile. 

Our  railroad  men  with  much  complacency  point  to  the 
fact  that  these  rates  do  not  cover  the  forwarding  of  pas- 
sengers' baggage  and  that  this  service  must  be  paid  for 
separately.  These  charges,  however,  are  very  modei'ate, 
being  on  120  pounds  of  baggage  8^-  cents  a  distance  of  34 
miles  or  less,  about  17  cents  for  a  distance  of  more  than 
34  and  less  than  G2  miles,  and  about  34  cents  for  any  dis- 
tance over  62  miles.  The  additional  charge  for  carrying 
120  pounds  of  baggage  from  Buda-Pesth  to  Predeal  is 
therefore  about  one-fourteenth  of  one  cent  per  mile.  It 
must  be  admitted  that  this  system  of  charging  separately 
for  passenger  and  baggage  is  eminentl}'  just,  for  there  is 
no  good  reason  why  the  passenger  without  baggage  should 
be  taxed  to  pay  for  the  carriage  of  that  of  his  fellow- 
traveler. 

The  zone  tariff  was  introduced  on  the  state  railways  of 
Hungary  by  M.  Barosz,  the  Hungarian  Minister  of  Com- 
merce, on  the  1st  of  August,  1889.  The  adoption  of  the 
new  tariff  was  ridiculed  and  condemned  as  visionary  by 
road  experts,  who  even  went  so  far  as  to  prove  to  the  sat- 
isfaction of  practical  railroad  men  that  the  innovation  was 
destined  to  be  a  failure.     For  a  month  or  two  it  almost 


442  Thr   Riiilnxul  Question. 


seemed  as  if  their  prediction  might  be  fulfilled,  the  num- 
ber of  passengers  carried  remaining  behind  the  number 
carried  during  the  corresponding  period  of  previous  years. 
But  soon  the  reaction  set  in.  The  month  of  November, 
1889,  already  witnessed  an  increase  in  the  number  of  pas- 
sengers as  well  as  in  receipts  over  the  same  month  of  the 
year  j)revious.  The  result  of  the  first  year's  trial  demon- 
strated the  wisdom  of  the  "innovation."  The  number  of 
passengers  carried,  which  had  been  only  5,18G,227  in 
1888-89,  rose  to  13,060,751  in  1889-90,  and  the  total 
receipts  for  passengers  and  Ijaggage  rose  from  9,138,715 
florins  to  11,186,321  florins,  a  gain  of  2,047,606  florins, 
or  22  per  cent. ,  during  the  first  year.  There  is  a  continued 
increase  both  in  the  number  of  passengers  and  in  re- 
ceipts, and  the  success  of  the  system  must  be  pronounced 
phenomenal.  The  railroad  experts  of  Europe,  who  had 
predicted  the  signal  failure  of  the  zone  system,  now  that 
the  unexpected  has  happened,  are  trying  to  discover  the 
particular  favorable  conditions  which  made  the  success  of 
the  system  possible  in  Hungary.  It  will  probablj'  be  a 
decade,  or  even  two,  before  the  railroad  experts  of  both 
hemispheres  will  be  entirely  reconciled  to  this  new  appli- 
cation of  the  old  principle  that  a  reduction  in  the  price  of 
a  commodity  increases  the  demand  for  it. 

It  is  strange,  indeed,  that  intelligent  men  should  be  so 
slow  in  recognizing  an  economic  principle  for  which  both 
history  and  daily  experience  furnish  an  unlimited  number 
of  illustrations.  The  post-office  receipts  everywhere  have 
increased  with  a  reduction  in  postage.  The  Government 
telegraph  in  England  did  not  become  self-supporting  until 
Parliament  made  a  sweeping  reduction  in  its  rates.  The 
revenue  from  the  Brookljm  bridge  never  paid  a  fair 
interest  on  the  capital  expenili^d   in  its  construction  until 


licnudics.  4-iij 

its  tolls  were  cut  down.  Were  it  necessary,  hundreds  of 
other  examples  couhl  he  added  to  these. 

Hungary  has  also  applietl  the  zone  system  to  its  freight 
traffic.  Three  zones  are  fixed  for  the  carrying  of  goods, 
viz. :  Zone  I,  for  distances  less  than  200  kilometers  (124 
miles);  Zone  II,  for  distances  over  200  anc]  less  than  400 
kilometers,  and  Zone  III,  for  distances  over  400  kilome- 
ters. A  uniform  tariff  is  established  for  each  zone,  which 
is  one-third  less  than  the  average  freight  rates  for  equal 
distances  formerly  in  force.  American  railroads  should 
profit  by  the  wisdom  and  experience  of  the  Hungarian 
Government,  and  adopt  at  an  early  day  such  features  of 
its  system  as  upon  our  soil  and  under  our  institutions  may 
be  made  practicable.  The  Hungarian  system,  with  some 
modifications,  is  now  being  tried  by  Austria  and  a  few  of 
the  German  states,  and  is  increasing  railroad  revenues 
wherever  adopted. 

There  is  a  growing  demand  for  lower  fares.  This  de- 
mand increases  in  the  same  proportion  in  which  the  desire 
and  the  necessity  for  travel  increase.  European  states 
have  not  been  slow  to  meet  it.  Reductions  are  made 
everywhere,  and  chiefly  favor  the  lower  classes.  Thus, 
when  Franqe,  within  the  last  year,  changed  her  passenger 
tariff,  she  reduced  first-class  fare  9  per  cent. ,  second-class 
fare  18  per  cent.,  and  third-class  27  per  cent. 

The  European  passenger  reports  show  the  numliers  of 
first  and  second-class  passengers  are  continually  falling 
off,  while  those  of  the  third-class  passengers  are  fast  in- 
creasing. In  England  and  Wales  the  number  of  first-class 
passengers  fell  between  1875  and  1880  from  87,000,000 
to  24,000,000  while  the  number  of  third-class  passengers 
increased  during  that  same  period  from  350,000,000  to 
601, 000. 000, and    this    increase    still    continues.      In   the 


444  TItc   Railroad  Question. 

United  Kingdom  the  number  of  third-class  passengers  for 
1891  was  over  750,000.000.  Furthermore,  passenger 
revenue  comes  chief!}'  from  the  third  class.  In  the  United 
Kingdom  the  receipts  from  first-class  passengers  were  in 
1889  £3,188,000;  from  second-class  passengers, 
£2,705,000;  and  from  third-class  passengers,  £19,- 
785,000.  It  is  thus  seen  that  receipts  from  third-class 
passengers  are  nearly-  3^  times  as  large  as  those  from  the 
first  and  second-class  passengers  combined.  A  similar 
proportion  is  found  in  nearly  every  country  on  the  conti- 
nent. European  roads  discovered  some  years  ago  that 
first  and  second-class  passengers  were  carried  at  a  loss, 
and  all  the  passenger  earnings  were  derived  from  third- 
class  passengers.  The  profits  from  this  source  show  a 
considerable  increase  every  year. 

The  average  fare  per  mile  is  2. 15  cents  in  the  United 
States,  and  only  1.17  cents  in  Germany,  1.67  cents  in 
Austria,  1.18  cents  in  Belgium,  1.29  cents  in  Denmark, 
1.45  cents  in  France,  1.64  cents  in  Italy,  and  1.45  cents 
in  Russia.  It  is  often  claimed  by  railroad  men  that  we 
travel  more  luxuriously  than  the  people  of  any  other 
country  in  the  world,  but  it  should  not  be  forgotten  that 
traveling  in  the  United  States  is  also  more  expensive  than 
anywhere  else.  It  is  contended  that  class  distinctions 
are  odious  in  America,  and  that  second  and  third-class 
cars  would  not  be  patronized.  The  same  argument  might 
be  applied  to  theaters,  hotels,  clothiers,  grocers,  etc.  It 
is  diflflcult  to  see  why  distinction  here  should  be  less  odious 
than  on  the  railroad  train.  The  truth  is,  Americans  are 
just  like  other  people  and  will  avail  themselves  of  accom- 
modations in  keeping  with  their  means  if  they  have  the 
opportunity.  Many^  passengers  who  will  not  travel  in  an 
uncouth   smoking-car   would,    if   clean   second-class  cars 


Remedies.  445 

were  provided,  gladly  dispense  with  the  luxury  of  an 
upholstered  seat  if  by  doing  so  they  eonld  save  from  $5 
to  iilO  a  day. 

A  common  laborer  in  this  countrj'  earns  from  a  dollar 
to  a  dollar  and  a  half  a  tlay,  and  in  the  performance  of 
his  labor  as  a  rule  sutfers  greater  inconvenience  than  does 
the  traveler  who  travels  the  country  in  a  second-class  car. 
Is  it  under  these  circumstances  at  all  likely  that  the  Am- 
erican would  hesitate  to  travel  for  a  day  in  a  plain  but 
clean  car,  if  by  doing  so  he  could  save  a  week's  earnings? 
We  ma}'  even  go  further  and  say  that  it  is  a  ver}^  reason- 
able assumption  that  the  man  wlio  earns  his  bread  by  the 
sweat  of  his  brow  would  choose  the  cheaper  car  if  the 
difference  in  one  day's  fare  were  equal  to  one  day's  wages. 
It  is  a  common  saying  in  Europe  that  the  first-class  pas- 
sengers consist  of  lords  and  fools,  and  few  of  the  hun- 
dreds of  thousands  of  American  tourists  traveling  abroad 
give  the  natives  occasion  to  class  them  with  either.  The 
first-class  car  has  almost  fallen  into  disuse  in  Ei.rope,  and 
even  the  patronage  of  the  second-class  is  less  than  ten  per 
cent,  of  that  of  the  third. 

Reduced  rates  for  return  tickets  should  be  provided 
under  rules  and  regulations  of  commissioners. 

The  Massachusetts  legislature  recently  passed  a  law 
requiring  the  railways  of  that  State  to  sell  interchangeable 
thousand-mile  tickets  for  $20.  The  State  commission  is 
given  power  to  except  any  company  from  its  requirements 
if  the  public  welfare  or  the  financial  condition  require  or 
demand  it.  This  is  a  step  in  the  right  direction  and 
should  be  followed  by  other  States.  Michigan  also  requires 
certain  roads  to  carry  first-class  passengers  at  two  cents 
per  mile. 

Railroad  companies  should  be  compelled  to  discard  the 


446  The  Railroad   Question. 

pass  as  a  courtes}'  as  well  as  a  consideration.  The  giving 
of  passes  under  the  guise  of  mileage  books,  or  tickets  for 
pretended  or  unnecessary  services,  is  very  pernicious  and 
should  be  prohibited.  Such  a  reform  would  soon  enable 
them  to  offer  low  fares  to  all.  An  emplo^'e  may  be  fur- 
nished free  transportation  while  actually  engaged  in  the 
business  of  his  company,  and  it  should  be  made  the  dutj- 
of  the  State  and  National  commissions  to  make  proper 
regulations  governing  such  free  transportation  of  emplo3'es. 
Half- fare  tickets  for  adults  should  also  be  abolished.  The 
pauper  ticket  is  given  to  the  minister  of  the  gospel  to 
secure  for  the  railroads  the  influence  of  the  pulpit,  though 
offered  under  the  pretense  of  charity  or  support  of 
the  church.  The  State  should  not  permit  the  railroad 
companies  to  practice  this  or  an}'  other  kind  of  charity  at 
the  expense  of  the  general  public.  The  railroad  is  a  high- 
way, and  the  company  operating  it  is  entitled  to  rates 
sufficient  to  pay  operating  expenses  and  a  fair  interest  on 
the  value  of  the  property.  It  can  therefore  easily  be  seen 
that  the  so-called  gifts  show  no  liberality  on  the  part  of 
the  railroad  company,  but  are  made  at  the  expense  of 
other  people.  Donations  made  b}'  railroad  companies 
should  be  made  from  the  pockets  of  their  stockholders 
and  not  from  the  pockets  of  their  patrons. 

All  perquisites  of  railroad  officers  should  be  abolished. 
When  a  railway-  official  has  become  so  pompous  and  conse- 
quential that  he  requires  a  special  car,  it  is  about  time  to 
look  about  for  his  successor.  If  we  are  to  have  a  special- 
car  aristocracy  in  this  country  let  it  be  supported  at  the 
expense  of  some  other  interest. 

Another  railroad  reform  is  needed  on  this  side  of  the 
Atlantic.  While  the  great  majorit}-  of  railroad  officials 
are  courteous  and  considerate,  and  perform  their  duties  in 


Remedies.  -t-1-7 

the  most  agreeable  and  acceptable  manner,  there  are  a  few 
who  do  not  properl}'  appreciate  the  relation  which  they 
sustain  to  the  patrons  of  their  companies.  They  are  in- 
clined to  forget  that  they  are  quasi-public  servants,  and 
that  the  public  has  a  right  to  demand  courteous  treatment 
at  their  hands.  All  railroad  employes  should  realize 
that  their  first  duty  is  to  administer  to  the  welfare  and  the 
convenience  of  the  public,  and  each  one  should  have  the 
full  protection  of  the  law  in  his  efforts  to  do  so.  The 
American  public  objects  much  less  to  an  inferior  car  than 
to  rude  treatment  by  the  companies'  agents.  Railroad 
superintendents  may  justly  be  blamed  for  the  incivilities 
of  their  subordinates.  It  is  their  duty  to  know  the  char- 
acter of  those  whom  they  employ,  and  not  to  retain  in 
their  employ  those  who  are  derelict  in  their  duty  to  the 
public.  Nothing  offends  the  feelings  of  a  true  American 
more  than  the  display  of  a  bureaucratic  spirit  on  the  part  of 
public  servants.  Nothing  more  commends  a  line  of  rail- 
road to  the  public  than  uniform  painstaking  kindness  and 
courteous  treatment  on  the  part  of  its  employes.  It  is 
made  the  duty  of  railroad  employes  of  France  "  to  so  treat 
the  public  as  if  they  were  eager  to  oblige  it,"  and  the  very 
first  paragraph  of  the  official  instructions  to  the  railroad 
employes  of  Germany  enjoins  them  ' '  to  assume  a  modest 
and  polite  demeanor  in  their  intercourse  with  the  public." 
In  this  connection  it  might  be  stated  that  the  second 
paragraph  of  those  instructions  positivel}'  forbids  the 
acceptance  of  any  gratuity  by  a  railroad  employe.  If  our 
American  sleeping  and  dining-car  companies  would  give 
their  employes  adequate  compensation  and  then  adopt  and 
enforce  the  Grerman  rule  concerning  "tipping,"  their  ser- 
Aice  would  gain  popularit}'  and  their  employes  self- 
respect. 


448  The  Railroad  Question. 

Entrance  into  the  railway  service  should  be  by  agree- 
ment for  a  definite  time,  and  dismissals  and  resignations 
should  be  governed  by  rules  agreed  upon  by  boards  of 
commissioners  and  the  companies. 

The  use  of  the  corporation  has  done  so  much  to  secure 
for  capital  so  large  a  share  of  the  profits  of  industrial 
enterprises,  and  large  salaries  also  for  the  oflacers  who  man- 
age them,  that  laborers  have  been  led  to  organize  them- 
selves into  associations  for  like  purposes,  and  ambitious 
men  have  not  been  slow  in  availing  themselves  of  the 
advantages  afforded  them  in  this  new  field. 

It  is  right  and  proper  for  laborers  to  organize  such 
associations  when  they  can  do  so  under  wise  and  econom- 
ical management,  for  the  purpose  of  securing  greater  in- 
telligence, better  education,  higher  culture,  higher  wages, 
a  shorter  work-day,  and  a  general  ameliorating  of  their 
condition,  all  of  which  will  tend  to  make  them  more  effi- 
cient workmen  and  also  better  enable  them  to  resist  the 
aggression  of  centralized  wealth;  for,  in  the  absence  of 
organization,  the  single-handed  employe  of  the  great  mod- 
ern employer  is  comparatively  helpless.  But  if  these 
organizations  are  allowed  to  be  controlled  by  ignorant, 
unreasonable  or  designing  men,  who  will,  at  trifling  provo- 
cations, resort  to  violent  and  unlawful  measures,  they  are 
sure  to  prove  harmful,  and  a  great  detriment,  instead  of 
a  help,  to  their  members,  and  the  sooner  they  are  aban- 
doned the  ])etter  for  all. 

Great  conflicts  are  sure  to  arise  between  organized  capi- 
tal and  organized  labor,  and  they  must  be  settled  in  a 
reasonable  wa}',  or  anarchy  will  prevail.  They  cannot  be 
left  for  headstrong  or  inconsiderate  men  representing 
either  side  to  determine,  but  the  line  must  be  drawn  by 
the  public  authorities. 


Rnnrdlfx.  449 

Each  year  affords  accumulated  evidence  of  the  necessity 
of  extending  legal  restrictions  over  the  management  of 
the  railway  business,  and  the  law,  as  laid  down  by  Judge 
Ricks  to  the  Ann  Arbor  strikers  last  March,  in  the  United 
States  Circuit  Court,  at  Toledo,  is  undoubtedly  correct 
and  will  meet  with  general  approval  from  the  public. 

He  says: 

' '  You  are  engaged  in  a  service  of  a  public  character, 
and  the  public  are  interested  not  only  in  the  way  in  which 
you  perform  your  duties  while  3-ou  continue  in  that  ser- 
vice, but  are  quite  as  much  in  .crested  in  the  time  and 
circumstances  under  which  you  quit  that  employment. 
You  cannot  always  choose  your  own  time  and  place  for 
terminating  these  relations.  If  you  are  permitted  to  do 
so  you  might  quit  3'our  work  at  a  time  and  place  and 
under  circumstances  which  would  involve  irreparable 
damage  to  your  employers  and  jeopardize  the  lives  of  the 
traveling  public." 

Mr.  Powderly,  in  commenting  upon  the  above  decision, 
does  not  complain  of  it,  but  says : 

"The  decision  shows,  as  I  have  said  before,  that  the 
principle  of  Government  ownership  of  the  railroads  is 
being  recognized  by  the  courts.  While  the  decision  is 
apparently  against  the  men,  it  emphasizes  our  position 
that  the  Government  has  the  right  to  supervise  the  rail- 
roads.     Now  it  is  a  poor  rule  that  won't  work  both  ways. 

' '  The  Interstate  Commerce  Law  was  passed  for  the  pur- 
pose of  controlling  the  railroads,  but  up  to  date  no  rail- 
road has  paid  any  attention  to  the  law.  Anarchy  of  the 
worst  kind  has  prevailed.  By  that  I  mean  a  total  dis- 
regard of  the  law,  and  that  is  what  the  corporations 
charge  against  the  anarchists.  The  courts  hold  them- 
selves in  readiness  to  obey  the  will  of  the  corporations 
when  a  charge  is  made  against  the  workmen,  but  no  effort 
is  made  to  carry  out  the  mandates  of  the  law  when  the 
provokers  of  strikes,  the  corporations,  violate  the  law." 

There  is  but  little  doubt,  if  the  judges  of  the  Federal 
courts  would  show    the   same  zeal   in   holding   railroad 


1  U%i 

\Hm      1 

1         IHMli 

V 

in 

■;.<'"■ 

'l\»t<*l. 

mauagyw  aiuenaltJe  to  the  law  as  Jiulge  Kick^  has  U^s^- 
playwi  iu  thb  <•»»«  with  the  employt«,  they  woiUU  swure 
inert^asetl  ooatUlenoe  from  the  imjojU©  in  the  tritmnab 
over  which  they  pi\«i<le. 

All  fair-u»iiule<l  inrwons  will  agree  that  labor  as  well  as 
irai>ital  must  U?  subjwtetl  to  i)roj)er  reatrainta,  and  that  the 
publie  will  (U-maiul  nothing  unrt^sonabie  from  either 

xVociUents  are  too  fre<|uent  vij)on  American  railroads. 
The  reports  of  the  lutt^rstate  Corameroe  Commission  give 
the  following  as  the  numbers  killetl  and  injured  during 
tl»©  years  namtnl 

jsai 


of  employ t5S  was  74i>,cJ01.  There  was,  therefore,  one 
dt>ath  for  every  30t»  men  employwl  and  one  injury  for 
every  c53  men  employwl  For  the  previous  year  one  was 
killwl  for  every  <>57  men  employ wl,  and  one  was  injurevl 
for  every  iJS^  men  employ eil.  While  trainmen  represent 
but  20  per  cent,  of  the  total  number  of  employes,  the 
casualties  among  them  represent  bS  per  cent,  of  the  total 
numWr  of  casualties. 

For  the  ywir  ISHS,  one  passenger  was  killer!  in  every 
1,52a,  I  Ui5  jKis.-KU»gers  carriwl,  and  one  injure<l  in  every 
220,024  cwrriwl. 

The  corresponding  mte  in  Kiigland  for  the  year  1 8S8  is 
one  passenger  killwl  for  every  ("»,  1)42, 330  carrie<l,  and  one 
injurtnl  for  every  527,577  canie<l 

Uaihx>ads  doing  a  large  busim^s  should  be  oomjjelled 
to  adopt  the  most  improve*!  applian(?es  for  avoidance  of 
acoidents. 


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II  V  Hill' II  ^"«  Hull  oil  iiiiiimiiiii'KIiii'IiIIiihI  liMHii  iiiiiiIm  III  IliM 
jiiililli'  lit'  Him  m^Iimiiim  |iimh)imiII|  hMIim  iiiiiiI  iliiilii^  Him 

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IIIMINM    IIIMHIIIM    IIHl    Ih    IH'HHiIm   |i.l'MI||l-l'   mNk  ll|l|lllllllH>"4t 

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l'M»|miiHlhli<  hii  Him  i\\^itHUi{: 

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IM  Him  I»iImim«|/  h\'  Him  \in\i\\h  wiiI'Mly,  ihn  M'  i  '  m  nw\ 
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M^|l/)/l;  m^ii    llll)ll'H>'MyiM/lM, 

litm^MUii  'i'ii^i  HIM  \iii\  I'Mw  M//iii)imiiMH  Wmh  mh  mi| 
MlfHi-fs  in  l/HtH  \,\Ui)i-  \:mUifi  MiHi/iM/'f/  M'lHi  Hh/sh  nH  i:\^n\ 
wwvjn    Ok  Him  fmuiiw^,  \i  ^iiui\  i\m\  n\'  t^i'\\nin\ii\f>  N  nj/im 


452  The   Rii'droad    Question. 

with  reference  to  those  of  their  rivals  as  to  inconvenience 
passengers  as  much  as  possible  by  delays  at  competing 
points.  To  remedy  this  evil  the  State  should  require  that 
every  time-table  should  have  the  approval  of  proper 
authorities,  and  no  change  should  be  permitted  without 
their  approval. 

Railroad  companies  are  chartered  for  the  purpose  of 
promoting  the  public  welfare,  and  every  Wolation  of  their 
charter  should  be  punished. 

It  should  be  the  main  object  of  railroad  legislation  to 
compel  companies  to  fulfill  their  public  obligations  without 
depriving  them  of  their  efficiency.  Above  all  things  these 
companies  should  be  stripped  of  the  power  to  use  their 
great  wealth  for  the  purposes  of  corruption  or  the  attain- 
ment of  political  influence.  Our  railroads  to-day  proba- 
bly represent  no  less  than  one-fourth  of  the  personal 
property  of  the  country,  and  this  vast  wealth  is  controlled 
by  a  comparatively  small  number  of  men,  many  of  whom 
have  in  the  course  of  time  become  so  arrogant  and 
despotic  that  they  have  little  regard  for  popular  rights 
or  the  expressed  will  of  a  free  people. 

It  is  reported  that  when,  a  few  years  ago,  a  represent- 
ative of  the  press  directed  Mr.  Vanderbilts  attention  to 
the  fact  that  the  public  disapproved  of  his  railroad  policy, 
the  latter  gave  vent  to  his  contempt  for  public  opinion  by 
the  no  less  profane  than  laconic  reply :  ' '  The  public  be 
damned."  Ex-Railroad  Commissioner  Coffin  called  on  one 
of  the  Goulds  to  urge  the  adoption  of  the  automatic  car- 
coupler  and  other  safety  appliances  for  the  roads  con- 
trolled by  them.  He  was  very  curtly  told  that  not  a 
cent  would  be  expended  by  the  Gould  roads  for  such  a 
purpose  until  the  West  had  repealed  its  obnoxious  railroad 
laws.      The  Gould  d3'nasty  thus  intends  to  accomplish  the 


y  ,   Remedies.  453 

repeal  of  these  laws  by  coercion.  Railroad  magnates  and 
their  lieutenants  often  show  still  greater  arrogance  in 
dealing  directly  with  their  employes. 

It  may  be  difficult  for  railroad  managers  of  the  present 
school  to  adapt  themselves  to  new  conditions;  it  may  be 
impossible  for  them  to  understand  how  any  other  practices 
than  those  which  have  long  been  established  can  succeed; 
yet  in  spite  of  them  both  the  law  and  public  sentiment  have 
already  undergone  great  changes,  and  still  greater  changes 
will  follow.  It  may  take  years  to  accomplish  this  work; 
to  bring  about  any  great  reform  requires  time  and  a  deter- 
mined purpose  on  the  part  of  its  advocates.  Yet  I  believe 
the  era  is  not  far  off  when  railroads  will  be  limited  to  their 
legitimate  sphere  as  common  carriers,  when  they  will  treat 
all  persons  and  all  places  as  impartially  as  does  the  Gov- 
ernment in  the  mail  service,  when  their  chief  factor  in  rate- 
making  will  be  the  cost  of  service,  when  they  will  respect 
the  rights  of  the  public  and  those  of  their  stockholders, 
insuring  perfect  service  to  the  former  and  fair  profits  upon 
the  actual  value  of  the  lines  operated  to  the  latter. 

The  fact  should,  finally,  not  be  overlooked  that  it  is  in 
the  power  of  the  Greneral  Government  to  prevent  many 
railroad  abuses,  and  especially  excessive  freight  charges, 
by  the  improvement  of  our  rivers  and  harbors.  That  our 
water-courses  act  as  levelers  of  interstate  rates  is  apparent 
from  the  fact  that  railroad  rates  invariably  rise  with  the 
freezing  of  the  water-wa.ys  and  fall  with  the  opening  of 
river  and  lake  navigation.  Bj"^  connecting,  wherever  feasi- 
ble, our  large  Western  rivers  with  the  great  lakes,  the  Gov- 
ernment could  greatly  extend  the  reign  of  competition 
in  transportation,  and  thereby  keep  freight  rates  within 
reasonable  bounds.  Lake  transportation  even  now  plays 
an  important  role.     It  mounts  to  no  less  than  1,700,000,- 


454  The  Railroad    Question.  "^ 

000  ton  miles  during  the  season  of  eight  months'  duration, 
and  it  is  almost  equal  to  one-fourth  of  the  total  ton  mile- 
age of  all  the  railroads  in  the  country  for  the  entire  year. 
The  average  rate  of  lake  transportation  has  been  reduced 
to  1.3  mills  per  ton  per  mile,  which  is  only  about  one- 
seventh  of  the  average  railroad  freight  rate  in  the  United 
States 

Where  the  masses  hold  the  sovereign  power,  there,  if 
anywhere,  the  welfare  of  the  people  should  be  the 
supreme  law.  Violent  political  commotions  never  disturb 
the  government  whose  policy  is  to  secure  the  greatest 
good  to  the  greatest  numlK^r.  Thorold  Rogers  justly 
remarks  that  the  strength  of  communism  lies  in  the  mis- 
conduct of  administrations,  the  sustentation  of  odious 
and  unjust  privileges  and  the  support  of  what  are  called 
vested  interests.  *  Lord  Coleridge,  in  a  remarkable  article 
published  not  long  ago,  recommended  a  revision  of  the 
laws  relating  to  property  and  contract,  in  order  to  facili- 
tate the  inevitable  transition  from  feudalism  to  democ- 
racy, and  laid  down  the  rule  that  the  laws  of  property 
should  be  made  for  the  benefit  of  all,  and  not  for  the 
benefit  of  a  class. 

During  the  middle  ages,  and  even  up  to  the  beginning 
of  the  pi'esent  century,  nearly  all  the  laws  on  the  statute 
books  looked  towards  the  protection  of  the  rights  of  the 
feudal  lord.  Provision  was  made  for  the  ^peditious  col- 
lection of  his  dues  and  a  severe  punishment  of  his  delin- 
quent debtor.  The  peasant  was  forced  to  labor  fifteen 
hours  per  day  and  three  hundred  and  sixty-five  days  in 
the  year  to  pay  the  baron's  rentals  and  sustain  life.  The 
law  permitted  him  to  be  flogged  for  failing  to  courtesy 
the  feudal  lord,  and  to  be  executed  for  injury  to  the 
lord's  person,  while  to  kill  a  peasant  was  no  worse  a  mis- 


Remedies.  455 

demeanor  than  to  kill  his  lordship's  favorite  dog  or  fal- 
con. In  short,  all  laws  were  made  to  protect  and  perpet- 
uate the  wealth  and  power  of  the  few  by  impoverishing, 
humbling  and  enslaving  the  masses. 

The  age  of  feudalism  has  given  way  to  an  age  of  demo- 
cratic libert}',  but  there  is  many  a  feudal  feature  left  in 
our  statutes  and  many  a  feudal  doctrine  is  enunciated  l)y 
our  judges  and  learned  expounders  of  modern  jurispru- 
dence. In  his  decision  in  the  Iowa  tariff  case  Judge 
Brewer  said : 

"I  read  also  in  the  first  section  of  the  Bill  of  Rights  of 
this  State  [Iowa]  that  '  all  men  are  by  nature  free  and 
equal  and  have  certain  inalienable  rights,  among  which  are 
those  of  enjoying  and  defending  life  and  liberty,  acquir- 
ing, possessing  and  protecting  property  and  pursuing  and 
obtaining;  safety'  and  happiness,'  and  I  know  that  while 
that  remains  as  the  supreme  law  of  the  State,  no  legisla- 
ture can,  directly  or  indirectly,  laj'  its  withering  or  des- 
trojing  hand  on  a  single  dollar  invested  in  the  legitimate 
business  of  transportation." 

Had  Judge  Brewer  taken  the  pains  to  read  on,  he  would 
have  found  in  section  2  of  the  Bill  of  Rights  the  follow- 
ing: 

' '  All  political  power  is  inherent  in  the  people ;  govern- 
ment is  instituted  for  the  protection,  security  and  benefit 
of  the  people.' 

It  is  strange  that  the  learned  Judge  failed  to  see  the 
difference  between  "men,"  the  creatures  of  God,  "by 
nature  free  and  equal,"  and  "possessing  certain  inalienable 
rights,"  and  corporations,  the  creatures  of  man,  having  no 
rights  except  those  which  the  State  sees  fit  to  give  them . 
Had  the  learned  Judge  perused  the  w^hole  of  the  document 
to  which  he  refers,  he  would  have  found  in  article  VIII, 
section  12,  the  following  provision: 

"  The  General  Assembly  shall  have  power  to  amend  or 


456  The  Railroad   Question. 

repeal  all  laws  for  the  organization  or  creation  of  corpora- 
tions, or  granting  of  special  or  exclusive  privileges  or  im- 
munities, by  a  vote  of  two-thirds  of  each  branch  of  the 
General  Assembly." 

It  should  thus  have  been  plain  to  the  learned  Judge 
that  in  Iowa  corporations  have  not  human  or  inalienable 
rights,  and  government  was  not  instituted  for  their  special 
protection,  but  for  the  protection,  security  and  benefit  of 
her  people.     Nor  should  it  be  otherwise. 

The  corporation  for  pecuniary  gain  has  neither  body 
nor  soul.  Its  corporeal  existence  is  mythical  and  ethereal. 
It  suffers  neither  from  cold  nor  from  hunger,  has  neither 
fear  of  future  punishment  nor  hope  of  future  reward.  It 
takes  no  interest  in  schools  or  in  churches.  It  knows 
neither  charity  nor  love,  neither  pity  nor  sympathy,  neither 
justice  nor  patriotism.  It  is  deaf  and  blind  to  human  woe 
and  human  happiness.  Its  only  aim  is  pecuniary  gain,  to 
which  it  subordinates  all  else. 

Should  the  State  sacrifice  the  welfare  of  all  her  people 
rather  than  lay  its  "withering  or  destroying"  hand  on  a 
single  dollar  of  corporate  wealth?  Are  there  no  human 
rights,  for  the  protection  of  which  government  was  estab- 
lished, more  sacred  than  the  rights  of  a  wealthy  corpora- 
tion's dollar?  Have  the  people  made  the  judiciary  a 
coordinate  branch  of  the  Government  in  order  that  it  may 
protect  the  vested  or  rather  usurped  rights  of  corpora- 
tions against  legislative  attempts  to  curtail  them?  If  the 
courts  so  interpret  the  power  which  has  been  delegated  to 
them,  they  will  awake  one  day  to  the  painful  reality  that 
popular  conAdctions  of  right  are  more  potent  than  judicial 
decrees. 

It  is  the  duty  of  the  State  not  so  much  to  defend  the 
so-called  vested  rights  of  corporations  as  to  make  such 
just  and  beneficial  laws  as  will  temper  inequality,  mitigate 


^       Remedies.  457 

poverty,  protect  the  weak  against  the  strong,  preserve 
life  and  health,  and,  in  short,  promote  the  welfare  and  the 
happiness  of  the  masses.  Constitutions  have  been  made 
to  accomplish  these  ends,  to  protect  the  lives,  the  liberty 
and  the  conscience  of  human  beings,  while  laws  have  been 
sufficient  to  protect  the  dollars  of  corporations.  It  is  a 
short-sighted  policy  on  the  part  of  the  latter  to  talie  unfair 
advantage  of  their  wealth  and  influence,  for  ' '  As  ye  sow, 
so  shall  ye  reap,"  is  the  inexorable  law  of  Providence. 
There  is  no  dynasty  so  mighty,  no  class  so  privileged,  no 
interest  so  influential  or  wealthy  as  to  obtain  immunity 
from  its  operation. 


APPENDIX. 


TABLE  No.   1. 


Compiled  from  the  Sixth  Annual  Report  of  the  Inter- 
state Commercp:  Commission. 


Mileag-e  in  the  United  States  June  30,  1891 108,403.74 

Number  of  men  employed 784,285 

Number  of  employes  per  100  miles 486 

Number  of  locomotives  per  100  miles 19 

Number  of  passeng-er  cars  per  100  miles 17 

Number  of  cai-s  per  100  miles _            721 

Capital »9,829,475,015 

Capital  per  mile -  - . .  60,943 

Gross  earnings 1,090,761,39.5 

Gross  earnings  per  mile 6,801 

Operating  expenses 731,887,893 

Operating  expenses  per  mile . .  4,538 

Net  income  from  operation 364,873,503 

Net  income  per  mile 3,363 

Of  gross  income  67.17  per  cent,  was  earned  on  freight. 

Of  gross  income  25.64  per  cent,  was  earned  on  passengers. 

Received  for  carrying  mails ^  34,870,015 

Received  rentals  from  express  companies 31,594,349 

Received  from  investments 133,911,136 

No.  of  passengers  carried 531,183,988 

No.  of  tons  freight  carried 675,608,333 

Average  journey  per  passenger 34.18  miles 

Average  haul  per  ton  of  freight 130  miles 

Average  number  passengers  per  train 43 

Average  number  tons  freight  per  train 181.67 

-Average  revenue  per  passenger  per  mile 3.143  cents 

Average  revenue  per  ton  per  mile  of  freight.  . .  .895  cents 

Average  revenue  per  train  mile,  passenger  ....  $1.06 

Average  revenue  per  train  mile,  freight 1.64 


Appendix. 


TABLE  No.  3. 


Statistics  of  the  Railways  of  the  United  Kingdom  for 
THE  Yeab  Ending  Dec.  31,  1891. 


From  the  English  Reform  Almanac  for  1893  and  from  the 

Report  of  Commissioners  R.  Giflfen  and  Courtenay 

Boyle  to  the  Board  of  Trade. 


Mileage 20,191  miles 

Double,  triple  or  quadruple 10,853  miles 

Capital  per  mile £45, .536 

Gross  income  per  mile 3,873 

Net  income  per  mile 1,818 

Income  from  passenger  traffic 35,130,916 

Income  from  goods  traffic 43,330,717 

Income  from  miscellaneous 3,498,974 

Income,  total £81,860,607 

Operating  expenses,  55  per  cent £45,144,778 

Rates  and  taxes 2,346,430 

Government  duty 331 ,360 

Paid  for  persons  injured 165,319 

Paid  for  damage  and  loss  of  goods 257,804 

Number  of  first-class  passengers 30,433,776 

Number  of  second-class  passengers 63,378,397 

Number  of  third-class  passengers 751,661,495 

Number  of  third-class  passengers  over  88  per  cent,  of  all. 

Number  of  employes 346,426 

Number  of  employes  per  100  miles 1,750 

Number  of  locomotives  per  100  miles 80 

Number  of  passenger  cars  per  100  miles 249 

Number  of  freight  and  other  cars 2,595 

Revenue  per  train  mile 58. 37d 

Expense  per  train  mile 30.54d 

Per  cent,  of  earnings  on  capital 4.21 


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iv  Appendix. 


TABLE  No.  4. 


Compiled  from   Roll's  Encyclopadie    des  Eisenbahnwesens. 


FREIGHT  TARIFFS.— Belgium. 


All  freig"!!!  is  divided  into  three  general  classes: 

1.  Exjjvess  Frehjlit,  which  is  delivered  by  special  messengers. 

Parcels  weighing  5  kg.  (11  lbs.)  and  less,  if  pi-epaid, 
are  carried  for  .80  fr.  (16c.)  for  all  distances.  Parcels 
not  prepaid  and  such  as  weigh  from  6  to  10  kg\  pa  3^ 
.90  fr.  for  a  distance  of  from  1  to  35  km,;  1  fr.  for  :'J\  to 
75  km.;  1.10  fr.  for  greater  distances. 

2.  Fast  Freight,  which  may  be  made  use  of  for  consignments 

weighing  up  to  300  kg.  (440  lbs.)  Parcels  weighing 
up  to  5  kg.  pay  .50  fr.  for  all  distances.  Parcels  not 
prepaid  and  such  as  weigh  from  5  to  10  kg.  pay  .50  fr. 
for  from  1  to  35  Icm.;  .00  fr.  for  distances  ranging  from 
26  to  75  km.,  and  .70  fr.  over  75  km. 

3.  Common  Freight,  which  is  again   sub-divided  into  four 

classes:  In  Class  I  400  kg.,  in  Classes  II  and  III  5,000 
kg.,  and  in  Class  IV  10,000  kg.  is  recognized  as  the 
minimum  weight. 


TAKIFF  FOR  THE  FOUR  DIFFERENT  CLASSES  OF  COMMON  FREIGHT. 

Term,inal  Charges — Franc  1.00. 

I  Class— For  1,000  kg.  (3,250  lbs.) 

From  1  to  5  km Fr.  1.00 

From  6  to  75  km.  per  km 10 

From  70  to  150  km.    OS  (per  km.  above    75) 

From  151  to  300  km 00  (per  km.  above  150) 

Above  200  km 06  (per  km.  above  200) 


Apjx.ndix.  V 

Belgium — Continued. 

II  Class— For  1,000  kg. 

From  1  to  5  km Fr.  0.40 

From  G  to  75  km.,  per  km 08 

From  76  to  125  km 04  (per  km.  above    75) 

Above  125  km 02  (per  km.  above  125) 

III  Class— For  1,000  kg-. 

From  1  to  5  km Fr.  0.30 

From  0  to  75  km. ,  per  km 06 

From  76  to  100  km 03 

From  101  to  125  km 02 

Above  125  km 01 

IV  Class— For  1,000  kg. 

From  1  to  24  km.,  per  km Fr.  0.06 

From  25  to  75  km.,  per  km 04 

From  76  to  100  km 02 

From  101  to  350  km 01 

Above  350  km 02 

For  distances  from  1  to  24  km.  the  terminal  charges  are  only 
.5  fr.  for  Class  IV. 


TABLE  No.  5. 


Germany. 


The  tariff  recognizes  the  following'  distinctions: 

1.  Fast  parcel  freight.  ^ 

2.  Fast  carload  freight. 

3.  Parcel  freight. 

4.  General  carload  Class  Al,  for  shipments  of  at  least 

5,000  kg. 

5.  General  carload  Class  B,  for  shipments  of  at  least 

10,000  kg. 

6.  Special  tariffs. 


vi  Appendix. 

Germany — Continued. 

Distance  charges  per  ton  per  kilometer:  (Pfennig,  }i  c.) 

1.  For  parcel 11.0  pf ennige 

2.  For  carload  Class  Al 6.7 

3.  For  carload  Class  B 6.0 

4.  For  Special  TarifE  A2 5.0 

5.  For  Special  Tarife  I 4.5 

6.  For  Special  Tariff  II 3.5 

7.  For  Special  TarifP  III: 

For  distances  up  to  100  km 2.6         •' 

For  distances  above  100  km 2.2         " 

8.  For  fast  parcel  freig-ht 22.0         " 

9.  For  fast  carload  freight,  twice  the  rate  of  Classes 

Al  and  B. 

Terminal  Charges. 

1.  For  parcels  and  carload  Class  Al: 

Up  to  10  km 10  pf ennig-e 

From  11  to  20  km 11 

From  21  to  30  km '. 12 

From  31  to  40  km 13 

From  41  to  50  km 14 

From  51  to  60  km 15 

From  61  to  70  km 16 

From  71  to  80  km 17 

From  81  to  90  km 18 

From  91  to  100  km 19 

Above  100  km 20 

2.  For  carload  Class  B: 

Up  to  10  km 8  pfennige 

From  11  to  20  km 9         " 

From  21  to  30  km 10 

From  31  to  40  km 11 

Above  40  km 13        " 


Apjiendix.  vii 

Germany — Continued. 

3.     For  Special  Tariffs  A3,  I,  II  and  III: 

Up  to  10  km  : 8  pfennige 

From  11  to  100  km 9 

Above  100  km 12 

Charges  for  Live  Stock. 

(a)  Horses.     Terminal  charg-e  per  head,  1  m.  (34e.) 

Distance  charge  per  kl.  for  one  head 0.30  mark 

Charge  per  kl.  for  2  head 40      " 

Charge  for  each  additional  head 10      " 

(b)  Cattle. 

Terminal  charge,  per  head 0.60  mark 

Distance  charge  per  kl.,  for  one  head 10      " 

Distance  charge  for  each  additional  head .. .    .03      " 

(c)  Sheep,  Hogs.  Calves,  etc.: 

Terminal  charge,  per  head 0.20  mark 

Distance  charge,  per  kl. ,  for  each  of  the  first 

10  heads 02      " 

Distance  charge,  per  kl.,  for  each  additional 

head 01      " 

If  shipped  in  carloads  the  charges  for  live  stock  are  .03  m. 
per  square  meter  per  kilometer. 


Appendix. 


TABLE  No.  6. 


France. 

The  French  railroads  divide  all  freight  into  six  different 
classes.  The  following-  is  the  tariff  adopted  by  a 
majority  of  the  principal  roads: 

Common  Freight. 


Classes. 


Up  to  25  km 

From  26  to  100  km    . , 
From  101  to  150  km  .. 
From  151  to  200  km  . . 
From  201  to  300  km  . . 
From  301  to  500  km  .  , 
From  501  to  COO  km  . 
From  601  to  70)  km  . 
From  701  to  800  km 
From  801  to  900  km 
From  901  to  1000  km 
Above  1,000  km 


Centimes  per  Ton — Kilometer, 


8 

4 

3.5 

3.5 

3.5 

3 

3 

2.5 

2  5 

2.5 

2 

2 


The  rates  for  fast  parcel  freight  are.  on  all  roads,  for  less 
than  40  kg.,  per  ton,  km.: 

Up  to  200  km B.")  centimes 

From  301  to  300  km 33 

From  301  to  400  km 31 

From  401  to  800  km 30        " 

From  801  to  1,000  km 28 

Above  1,000  km 35 

For  more  than  40  kg. : 

Up  to  100  km 32  centimes 

From  101  to  300  km 30 

From  301  to  500  km 38 

From  501  to  600  km 36        " 

From  601  to  700  km". 34 

From  701  to  800  km 32         " 

From  801  to  900  km 20        " 

From  901  to  1,000  km 18         " 

Above  1,000  km 16 

Express  parcels  weighing  np  to  3  kg.  (6  3-5  lbs.),  pay  1  fr.  for 

all  distances,  and  i^arcels  weighing  from  3  to  5  kg.  pay 
fr.  1.30.  Delivery  to  the  house,  35  centimes  (5c.) 
additional. 

Live  Stock,  per  piece,  per  km. : 

Horses  and  cattle 16  centimes 

Calves  and  hogs 6        " 

Sheep,  etc 3        " 


Appendix. 


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xii  Appendix. 


TABLE  No.  10. 


STATE  OF  IOWA. 


SCHEDULE 

OF 

REASONABLE   MAXIMUM   RATES    OF   CHARGES 

In   Effect  March   1,   1893, 

FOR  THE    TRANSPORTATION    OP 

Freight  and  Cars  on  each  of  the  Railroads  in  the  State  of  Iowa,  together 

toith  a  Classification  of  Freights,  iirejjared  by  the  Railroad 

Commissioners,  in  accordance  luith  the  Laws 

of  the  State  of  Iowa. 


Superseding  all  former  schedules  on  the  said  railroads, 
including  all  bridges  and  ferries  used  or  operated  in  con- 
nection with  any  railroad;  and,  also,  all  the  roads  in  use 
by  any  corporation,  receiver,  trustee  or  other  person 
operating  a  railroad,  whether  owned  or  operated  under 
contract,  agreement,  lease  or  otherwise,  or  which  may 
hereafter  be  purchased,  leased,  acquired  or  operated 
within  the  State  of  Iowa. 

The  classification  of  freights  applies  to  all  the  lines, 
regardless  of  class.  The  schedule  of  maximum  rates 
applies  to  all  Class  "A  "  roads.  The  rates  on  Class  "  B  " 
roads  will  be  fifteen  per  cent,  higher,  and  the  rates  on 
Class  "  C"  roads  thiety  -per  cent,  higher  than  the  i*ates 
named  for  Class  "  A  "  roads.     The  respective  roads  have 


Appendix.  xiii 

been  classified  b}'  the  Executive  Council  of  the  State  as 
follows,  which  classification  is  adopted  by  the  Railroad 
Commissioners,  and  made  part  of  this  schedule: 

CLASSIFICATION  OF  ROADS. 

CLASS    "A." 

Where  gross  annual  earnings,  per  mile,  shall  be  S4,000  or 
more. — Biarlington,  Cedar  Rapids  and  Northern  Railway; 
Chicago  and  Northwestern  Railway;  Chicago,  Burlington  and 
Quincy  Railroad;  Chicago,  Milwaukee  and  St.  Paul  Railway; 
Chicago,  Rock  Island  and  Pacific  Railway;  Chicago  and  Great 
Western  Railway  (operating  the  Chicago,  St.  Paul  and 
Kansas  City  Railway);  Dubuque  and  Sioux  City  Railroad; 
Chicago,  St.  Paul,  Minneapolis  and  Omaha  Railway;  Sioux 
City  and  Northern  Railway;  Chicago,  Santa  Fe  and  California 
Railway;  Sioux  City  and  Pacific  Railroad;  Toledo,  Peoria  and 
Western  Railway;  Union  Pacific  Railway 

CLASS  "B." 

Where  gross  earnings  are   S3, 000   or  over   and  less  than 

$4,000  per  mile. — Iowa  Central  Railway;    Kansas  City,    St. 

Joseph  and  Council  Bluffs  Railroad;  Omaha  and  St.  Louis 

Railway. 

CLASS  "  c." 

Where  annual  earnings  are  less  than  !53,000  per  mile. — 
Chicago,  Burlington  and  Kansas  City  Railway;  Chicago,  Ft. 
Madison  and  Des  Moines  Railway;  Chicago,  Iowa  and  Dakota 
Railway;  Crooked  Creek  Railroad  and  Coal  Company;  Des 
Moines  and  Kansas  City  Railway;  Des  Moines,  Northern  and 
Western  Railway;  Humestonand  Shenandoah  Railroad;  Iowa 
Northern  Railway;  !Mason  City  and  Fort  Dodge  Railroad; 
Minneapolis  and  St.  Louis  Railway;  St.  Louis,  Keokuk  and 
Northwestern  Railroad;  Tabor  and  Northern  Railwaj^ 
Wabash  Railroad:  Winona  and  Southwestern  Railwaj*:  Keo- 
kuk and  Western  Railway. 

Burlington  and  Western  :  Burlington  and  Northwestern  ; 
Ames  and  College;  Albia  and  Centerville. 


XIV 


Apjjendix. 


5  .. 
10... 
15.  . 

20... 
25... 

30.  . 
35... 
40... 
45... 
50.    . 

55. 

60... 

65... 

70... 

75... 

80... 
85.  . 
90... 
95... 
100... 

105... 
110.  . 
115... 
120.  . 
125... 

130. . . 
135. . . 
140.  . 
145... 
150. . . 

155... 
160... 
165... 
170... 
175... 

180. . . 
185... 
190... 
195... 
200... 

210... 
220... 
230... 
240.  . 
250... 


MERCHANDISE  IN  CENTS 
PER  100  LBS. 


faU 


14 

14.8 

15.6 

16.4 

17 

17.6 
18.2 
18.8 
19.4 
20. 

20.4 

20.8 
21  2 
21  !6 
22 

22.4 
22.8 
23.2 
23.6 
24 

24.8 
25.6 
26.4 
27.2 


28.8 
29.6 
30.4 
31.2 
32 

32.8 
33.6 
34.4 
35.2 
36 

36.8 
37.6 
38.4 
39.2 
40 

41.6 
43.2 

44.8 
46.4 
48 


11.9 
12.58 
13.26 
13.94 
14.45 

14.96 
15. 4' 
15.98 
16.49 
17 

17.34 

17.68 
18.02 
18.36 
18.7 

19.04 
19  38 
19 
20.06 
20.4 

20.89 
21.38 
21.8 
22.36 
22.85 

23.3.f 
23.83 
24.32 
24.81 
25.3 

25.79 

26.28 
26.77 
27.26 
27.75 

28.24 
28.73 
29.22 
29.71 
30.2 

31.18 
32.16 
33.14 
34.12 
35.1 


9.34 
10.1 
10.4 
10.94 
11.34 

11.73 

12.1 

12.5 

13 

13.34 

13.6 

13.87 

14.14 

14.4 

14.67 

14.94 

15.2 

15.47 

15.73 

16 

16.35 

16.7 

17.05 

17.4 

17.75 

18.1 

18.45 

18.8 

19.15 

19.5 

19.85 

20.2 

20.55 

20.9 

21.25 

21.6 

21.95 

22.3 

22.65 

23 

23.7- 

24.4 

25.1 

25.8 

26.5 


8.2 
8.5 


9.1 
9.4 
9.7 
10 

10.2 
10.4 
10.6 
10.8 
11 

11.2 
11.4 
11.6 
11.8 
12 

12.33 
12.66 
12.99 
13.32 
13.65 


SPECIAL  CARLOAD  CLASSES  IN  CENTS 
PER  100  LBS. 


4.9 

5.18 

5.46 

5.74 

5.95 

6.16 
6.37 

6.58 
6.79 
7 

7.14 

7.28 
7.42 
7.56 
7.7 

7.84 


8.4 


8.98 
9.27 
9.56 
9.85 


5 

5  3 
5.6 
5.8 
6 

6.2 
6.4 
8.6 
6.8 
7.05 

7.2 
7.4. 
7  6 
7.8 


8.2 
8.4 


9.35 
9.7 
10.05 
10.4 
10. 7i 


13.98  10.14  11.1 

14.31  10.43  11.45 

14.64,  10.72i  11.8 

14.97  11.01  12.15 

15.3  I  11.3  12.5 


15. a3 
15.96 
16. ;» 
16.62 
16.95 

17.28 
17.61 
17.94 
18.27 
18.6 

19.24 
19.88 
20., 52 
21. .6 
21.8 


11.59 
11.88 
12.17 
12.46 
12.75 

13.04 
13.33 
13.62 
13.91 
14.2 

14.78 
15.36 
15.94 
16.52 
17.1 


12.84 
13.18 
13.5; 
13.86 
14.2 

14.54 

14.88 
15.22 
15.56 
15.9 

16.56 
17.22 
17.88 
18.54 
19.2 


4.9 
5.18 
5.46 
5.74 
,5.95 

6.16 
6.3' 
6.58 
6.71 

7 

7.14 

7.28 
7.4- 
7  56 
7.7 

7.8- 

7.98 

8.1 

8.26 

8.4 

8.63 
8.86 
9.09 
9.32 
9.55 

9.78 
-10.01 
10.24 
10.4' 
10.7 

10.93 
11.16 
11.39 
11.62 
11.85 

12.08 
12.31 
12.45 
12.77 
13 

13.45 

13.9 

14.35 

14.8 

15.25 


d 

Q 

to 

m 

01 

c3 

a 

O 

o 

4.2 

3.5 

4.44 

3.7 

4.68 

3.9 

4.92 

4.1 

5.1 

4.25 

5.28 

4.4 

5.46 

4.55 

5.64 

4.7 

5.82 

4.85 

6 

5 

6.12 

5.1 

6.24 

5.2 

6.36 

5.3 

6.48 

5.4 

6.6 

5.5 

6.72 

5.6 

6.84 

5.7 

6.96 

5.8 

7.08 

5.9 

7.2 

6 

7.4 

6.17 

7.6 

6.34 

7.8 

6.51 

8 

6.68 

8.2 

6.85 

8.4 

7.02 

8.6 

7.19 

8.8 

7.36 

9 

7.53 

9.2 

7.7 

9.39 

7.87 

9.58 

8.04 

9.77 

8.21 

9.96 

8.38 

10.15 

8.55 

10.34 

8.72 

10.53 

8.89 

10.72 

9.06 

10.91 

9.23 

11.1 

9.39 

11.49 

9.71 

11.88 

10.03 

12.27 

10.35 

12.66 

10.67 

13.05 

10.99 

3 

2.8 

2.96 

3.12 

3.25 

3.4 

3.52 
3.64 
3.76 

3.88 
4 

4.08 
4  16 
4.25 
4.32 
4.4 

4.48 
4.56 
4.64 
4.72 
4.8 

4.96 
5.12 
5.28 
5.44 
5.6 

5.76 
5.92 
6.08 
6.24 
6.4 

6.56 

6.72 
6.88 
7.04 
7.2 

7.36 
7.52 
7.68 
7.84 


8.3 
8.6 


9.2 
9.5 


Appendix. 


XV 


MERCHANDISE  IN  CENTS 

SPECIAL   CARLOAD   CLASSES  IN 

CENTS 

PER  100  LBS 

PER    100  LBS 

Miles. 

n 

f3 

< 

n 

d 

Q 

» 

£3 

O   01 
4)  — 

(BO 

13  m 
u  in 

2iS 

'u  w 

fao 

S3 

3 

en 
m 

3 

O 

in 
en 

5 

en 
eS 

5 

260 

49.6 

36.08 

27.2 

22.44 

17.68 

19.86 

15.7 

13.44 

11.31 

9,8 

2T0 

51.2 
52.8 

37.06 
38.4 

27.9 
28.6 

23.08 
23.72 

18.26 

18.84 

20.52 

16.15 

13.83 
14.22 

11.63 
11.95 

10,. 

280 

21.181  16.6 

10.4 

290 

54.4 

39.02 

29,3 

24.36 

19.42 

21.84 

17.05 

14.61 

12.27 

10.7 

300 

56 
56  5 

40 
40.5 

30 
30.5 

25 
25.5 

20 
20.5 

22.5 
23 

17.5 
18 

15 
15.5 

12.5 
13 

11 

310 

11.5 

330 

57. 

41 

31 

26 

21 

23.5 

18.5 

16 

13.5 

12 

330 

57.5 

41.5 

31.5 

26.5 

21.5 

24 

19 

16.5 

14 

12.5 

340 

58. 

42 

32 

27 

22 

24.5 

19.5 

17 

14.5 

13 

350 

58.5 
59 

42.5 
43 

32.5 
33 

27.5 

28 

22.5 
23 

25 
25.5 

20 
20.5 

17.5 
18 

15 
15.5 

13.5 

360.   

14 

370 

59.5 

43.5 

33.5 

28.5 

23.5 

26 

21 

18.5 

16 

14.5 

380 

60 

60.5 

61 

61.5 
62 

44 

44.5 

45 

45.5 
46 

;4 

34.5 
35 

35.5 
36 

29 

29.5 

30 

30.5 
31 

24 

24.5 

25 

25.5 
26 

26.5 

27 

27.5 

28 

28.5 

21.5 

22 

22.5 

23 
23.5 

19 

19.5 

20 

20.5 

21 

16.5 

17 

17.5 

18 
18.5 

15 

390 

15.5 

400 

16 

410     .... 

16.5 

420 

17 

430 

62.5 
63 

46.5 

47 

36.5 
37 

31.5 
32 

26.5 
27 

29 
29.5 

24 
24.5 

21.5 
22 

19 
19.5 

17.5 

440 

18 

450 

63.5 
64.5 

47.5 

48 
48.5 

37.5 

38 
38.5 

32.5 

33 
33.5 

27.5 

28 
28.5 

30 

30.5 
31 

25 

25.5 

26 

22.5 

23 
23.5 

20 

20.5 
21 

18.5 

460 

19 

470 

19  5 

480 

65 

49 

39 

34 

29 

31.5 

26.5 

24 

21.5 

20 

490 

65.5 

49.5 

39.5 

34.5 

29.5 

32 

27 

24.5 

22 

20.5 

500 

66 

50 

40 

35 

30 

32.5 

27.5 

25 

22.5 

21 

Note. — \\Tien  rates  are  not  shown  in  this  table  for  the  exact  dis- 
tance, the  rates  given  for  the  next  g-i'eater  distance  will  prevail.  Wheh 
these  rates  and  the  classification  conflict,  these  rates  will  govern. 


XAH 


Appendix. 


CARLOAD  CLASSES  IN 

LIVE  STOCK  IN  CENTS 

COAL  IN  CENTS  PER 

CENTS  FEB  100  LBS. 

PER  100  LBS. 

TON  OF  2,000  .LBS. 

a 

^ 

1                1 

1-^- 

"3 

uicon  ->5      -jj^  a 

tflM  H 

■6 

ts-o 

c4  55  a   B  o 

■a    ra; 

'9    '  V 

bj) 

—  a 

(8  tn  a 

d  to  a 

u 

.<9 
u 

u 

^ 

o  £  S   a  « 

OP  £ 

M 

V 

<u  01 

Sg  3 , a  o 

%/s  s 

So  3 

O 

a 

0. 

a 

e 

o 
96 

—  u 

ft 

Sj3  0) 

arloads — i 
0  lbs.,  31-f 
urement. 
leek)  in  Ci 
eiRht  15,0C 
side  meas 

a 
a 
■a 
a 

g 

1e 

5  'S'te 

c8 

ft 

a 

c9 

P 
o 
Id 

« 

■°  2 
o  a 

c3  0]^ 

*  a  ce 

a*-rt 

v'~  a 

cj  fell's 

CO  n  o 

s,  ^  c 

-So 

D  r;  O 

o 
u 

"S 

0 

3     . 

"a 

0 

Q 

ft 

"3 
o 

Q 

i 

o 

X 

M 

K 

b 

a 

03 

a 

m 

01 

5... 

.  4.5 

3.75 

3.5 

3.25 

5.37 

5.13 

5.67 

8.4 

.60 

.30 

.25 

10... 

4.7 

3.92 

3.66 

3.39 

5.75 

5,53 

6 

8.8 

.64 

,34 

.28 

15... 

4.9 

4.09 

3.82 

3.53 

6.12 

5.92 

6.33 

9.2 

.68 

.38 

.31 

20. . . 

5.1 

4.26 

3.98 

3.67 

6.5 

6.32 

6.67 

9.6 

.72 

.42 

.34 

25... 

5.3 

4.43 

4.14 

3.81 

6.87 

6.71 

7 

10 

.76 

.46 

.37 

30... 

5.5 

4.6 

4.3 

3.95 

7.25 

7.11 

7.33 

10.4 

.80 

.50 

.40 

35... 

5.7 

4.77 

4.45 

4.09 

7.62 

7.5 

7.67 

10.8 

.84 

•54 

.43 

40... 

5.9 

4.93 

4.6 

4.23 

8 

7.89 

8 

11.2 

.88 

.58 

.46 

45... 

6.1 

5.09 

4.75 

4.37 

8.37 

8.29 

8.33 

11.6 

.92 

•62 

.49 

50... 

6.3 

5.25 

4.9 

4.51, 

8.75 

8.68 

8.67 

12 

.96 

.66 

.52 

55. . . 

6.5 

5.4 

5.04 

4.65 

9.12 

8.95 

9 

12.4 

1.00 

.70 

.55 

60... 

6.7 

5.55 

5.18 

4.79 

9.5 

9.21 

9.33 

12.8 

1.04 

.74 

.58 

65... 

6.9 

5.7 

5.32 

4.93 

9.87 

9.47 

9.67 

13.2 

1.08 

.78 

.60 

70... 

7.1 

5.85 

5  46 

507;  10.25'     9.74'  10 

13.6 

1.12 

.82 

.62 

75... 

7.3 

6 

5.6 

5.2 

10.62    10      1  10.16 

14 

1.16 

.85 

.64 

80... 

7.5 

6.15 

5.74 

5.33 

11          10.26    10.32 

14.4 

1.20 

.88 

.66 

85... 

7.7 

6.3 

5.88 

5.46 

11.37    10.53    10.48 

14.8 

1.24 

.91 

.68 

90... 

7.9 

6.45 

6.02 

5.59 

11.75    10.79    10.64 

15.2 

1.28 

.94 

.70 

95... 

8 

6.6 

6.16 

5.72 

12.12'  ll.OSj  10.8 

15.6 

1.32 

.97 

.72 

100... 

8.1 

6.75 

6.3 

5.85 

12.5  j  1L32 

10  96 

16 

1.36 

1.00 

.74 

105... 

8.24 

6.87 

6.41 

5.95 

12.75    11.53 

11.12 

16.3 

1.40 

1.015 

.755 

110... 

8.38 

6.99 

6.52 

6.05 

13 

11.74 

11.28 

16.6 

1.44 

1.03 

.77 

115... 

8.52 

7.11 

6.63 

6.15 

13.25 

11.95 

11.44 

16.9 

1.48 

1.045 

.785 

120... 

8.66 

7.23 

6.74 

6.25 

13.5 

12.16 

11.6 

17.2 

1.52 

1.06 

.80 

125.. 

8.8 

7.35 

6.85 

6.35 

13.75 

12.37 

11.8 

17.5 

1.55 

1.075 

.815 

130... 

8.94 

7.46 

6.96 

6.45 

14 

12.58 

12 

17.8 

1.58 

1.09 

.SJ 

135... 

9.08 

7.57 

7  07 

6.55 

14.25 

12.79 

12.2 

18.1 

1.61 

1.105 

.845 

140... 

9.22 

7.69 

7  18 

6.65 

14.5 

13 

12.4 

18.4 

1.6-1 

1.12 

.86 

145... 

9.36 

7.79 

■    7.29 

6.75 

14.75 

13.21 

12.6 

18.7 

1.67 

1.135 

.875 

150. . . 

9.5 

7.9 

7.4 

6.85 

15 

13.42 

12.8 

19 

1.70 

1.15 

.89 

155... 

9.63 

8.01 

7.5 

6.95 

15.25,  13.63 

13 

19.3 

1.73 

1.165 

.905 

160. .. 

9.79 

8.12 

7.6 

7.05 

15.5      13.84 

13.2 

19.6 

1.76 

1.18 

.92 

165... 

9.89 

8.23 

7.7 

7.15 

15.751  14.05 

13.4 

19.9 

1.79 

1.195 

.935 

170. . . 

10.02 

H.34 

7.8 

7.25 

16         14.26    13,6 

20.2 

1.82 

1.21  t 

.95 

175.. 

10.15 

8.45 

7.9 

7.35    16.25    14.47|  13.8 

20.5 

1.85 

1.225 

.965 

Ajqii  luli'.r. 


xvii 


CARLOAD   CLASSES  IN 

LIVE  STOCK  IN  CENTS 

COAL  IN  CENTS  PER 

CENTS  PER  100  LBS. 

PER- 100  LBS. 

TON  OF  2,000  LBS. 

a 

1  -" 

a  M 

1  -^^^ 

1--^ 

■3 

u 

cfl  ^  3 

tn"  a 

JiOT  n 

•6 

e«  en  a 

t- 

c4  M  a 

5  S  E 

o 

ja-d 

j^ 

Ofi  S 

d  -^ 

op  5 

0x1  £ 

to 

u 

■^  a 

^ 

."  0 

'u'~'  ^ 

u~  «- 

H 

a 

a 

o 

i 

a  0 

3 

0 

0 
«  . 

11 

<u  0 
fi  0 

*^  s 

0  to 

^  «    • 

P  -r  IB 

P. 
H 

V 

a 
0 

g  ° 

•2°  a 

n  ^  c 
0  H  ^ 
»)  5  0 

-Jico  c 

aj'-  a 

o'S  en 

ami) 

'ZZ5 

0  bc-o 

Si  " '" 

s  ^  ^ 
saS 

ao  <u 

of  »> 

■w  'S  'tr. 
0,  ^  C 

"^'acn 

isaS 

■3 
0 
0 

a 
-d 

13 
<3 

n 

a 

p 

■3 
0 

j5 

■a 
a 
a 
<i 
<u 
P, 

"S 
0 

00 

H 

■(3 

0  ^ 

u  .J-  •- 

tS   01,0 

S.So 
095 

m  9  0 

0     PlH 

.sa- 

0 
0 

2 

0 

S 

^ 

0 

W 

tc 

M 

fe 

K 

te 

1.88 

CO 

to 

180. . . 

10.28 

8.56 

8 

7.44 

16.5 

14.68 

14 

20.8 

1.24 

.98 

185... 

10.41 

8.67 

8.1 

7.53 

16.75 

14.89 

14.2 

21.1 

1.91 

1.355 

.995 

190. . . 

'10.54 

8.78 

8.3 

7.63 

17 

15.11 

14.4 

21.4 

1.94 

1.37 

1.01 

195... 

10.67 

8.89 

8.3 

7.71 

17.35 

15.32 

14.6 

31.7 

1.97 

1.385 

1.025 

200. . . 

10.8 

9 

8.4 

7.8 

17.5 

15.53 

14.8 

33 

2.00 

1.30 

1.04 

210. . . 

11.07 

9.23 

8.61 

8 

17.87 

16 

15.22 

22.3 

2.04 

1.33 

1.06 

220... 

11.34 

9.46 

8.82 

8.3 

18.35 

16.47 

15.61 

23.7 

2.08 

1.34 

1.08 

230. . . 

11.61 

9.69 

9.03 

8.4 

18.63 

16.95 

16.06 

33.1 

2.12 

1.36 

1. 10 

340. . . 

11.88 

9.92 

9.34 

8.6 

19 

17.42 

16.48 

33.5 

2.16 

1.38 

1.12 

250... 

12.15 

10.15 

9.45 

8.8 

19.37 

17.89 

16.9 

33.9 

2.20 

1.40 

1.14 

260. . . 

12.42 

10.37 

9.66 

8.99 

19.75 

18.37 

17.32 

24.3 

2.24 

1.42 

1.16 

270, . . 

12.69 

10.59 

9.87 

9.18 

20.13 

18.84 

17.74 

24.7 

2.28 

1.44 

1.18. 

280... 

12.96 

10.81 

10.08 

9.37 

20.5 

19.32 

18.16 

25.1 

2.33 

1.46 

1.20 

290  .. 

13.26 

11.03 

10.29 

9.56 

20.87 

19.79 

18.58 

25.5 

3.36 

1.48 

1.22 

300... 

13.53 

11.25 

10.5 

9.75 

21 .25 

20.26 

19 

25.9 

3.40 

1.50 

1.24 

310... 

13.8 

11.48 

10.71 

9.95 

31.6 

30.53 

19.13 

26.7 

2.44 

1.52 

1.25 

320. . . 

14.07 

11.71 

10.92 

10.15 

21.95 

30.79 

19.25 

37.1 

3.48 

1.54 

1.26 

330. . . 

14.34 

11.94 

11.13 

10.35 

23.3 

31.05 

19.37 

37.5 

2.53 

1.56 

1.27 

340. . . 

14.61 

12.17 

11.34 

10.55 

22.65 

21.32 

19.5 

37.9 

2.56 

1.58 

1.28 

350. . . 

14.88 

12.4 

11.55 

10.75 

23 

21.58 

19.62 

28.3 

2.60 

1.60 

1.29 

360. . . 

15.15 

12.62 

11.76 

10.94 

23.35 

21.84 

19.75 

28.7 

2.64 

1.63 

1.30 

370. . . 

15.42 

12.84 

11.97 

11.13 

23.7 

22.11 

19.87 

29.1 

2.68 

1.64 

1.31 

380... 

15.68 

13.06 

12.18 

11.32 

24.05 

23.37 

20 

29.5 

2.72 

1.66 

1.32 

390. . . 

15.94 

13.28 

12.39 

11.51 

24.4 

23.63 

20.5 

29.9 

2.76 

1.68 

1.33 

400... 

16.2 

13.5 

12.6 

11.7 

24.75 

23.89 

21 

30.3 

2.80 

1.70 

1.34 

410. . . 

16.47 

13.72 

12.81 

11.89 

35.1 

33.15 

21.12 

30.7 

420. . . 

16.73 

13.94 

13.02 

12.08 

25.45 

23.41 

21 .25 

31.1 

'  2!88 

'i'.74" 

1.36 

430 

17 
17.27 

14.16 
14.38 

13.23 
13.44 

12-22 
13.46 

25.80 
26.15 

23.67 
23.93 

21.37 
21.5 

31.5 
31.9 

440^ ; '. 

"sige 

'i'.78" 

i^ss 

450. . . 

17.54 

17.80 

14.60 
14.82 

13.65 
13.86 

13.65 

12".  84 

26.5 

26.85 

34.19 
34.45 

21.62 
21.75 

32.3 
32.7 

460. . . 

3.04 

1.82 

1.40 

470. . . 

18.06 

15.04 

14.07 

13.03 

37.3 

34.71 

21.87 

33.1 

480. . . 

18.33 

15.26 

14.38 

13.32 

37.55 

34.97 

23 

33.5 

"s.vk 

l!86' 

'i!42' 

490. . . 

18.60 

15.48 

14.49 

13.41 

37.9 

35.33 

22.12 

33.9 

500... 

18.87 

15.70 

14.70 

13.60 

28.15 

25.49 

22.25 

34.3 

"3.20 

"iigo 

"i.44' 

*  Stock  cattle  or  feeders  and  calves  take  75  per  cent,  of  fat  cattle  rate ; 
31-foot  car  (internal  measurement)  is  adopted  as  llie  standard  for 
minimum  weight,  as  per  heading  in  table;  28-foot  cars,  90  percent,  of 
above;  33-foot  6-ineh  cars,  108  per  cent,  of  above;  other  lengths  of  cars 
to  take  same  proportion  as  above. 


I  N  DEX. 


Abbett,  Gov 

Absentee  ownership, 
Abuses, 

cardinal, 

for  protection  against, 

must    resort   to   polls 
and  not  to  courts. 

increased, 

of  railroads, 

origin  of, 

still  practiced, 

Accidents 

Acworth,  Mr.  W.  M, 

Adams,  C.F.,  Jr..  lieresy,    . 

difficulty  not    in   legis- 

lation, 

favors  jjooling,     . 

on  character  of  railroad 

men, 

on  Iowa  law, 

H.  C,  motive   for  own- 

ership, 
Africa, 

roads  constructed. 

Agriculture  among  Babylonians 

and  Assyrians, 
Albany  Evening  Argus, 

Albia, 

Algiers,         .        .      /. 

Algona,  

American  colonies,    . 

experience, 

investments       a      re- 

proach, 
Americans    would    avail    them- 
selves of  low  rates,     . 
American  Transfer  Company, 
Amsterdam,  .... 

owes  to  canal, 

Ann  Arbor  Strikers, 

Area  of  land  grants, 
Argentine  Republic, 


113    Arrogance,  ....    4,53 

287    Asia,  59 

'"•     early  nations  of  .        ,18 

^'^^     Athens   connected  with   Pivajns, 

protected  road,        ...  24 

Atkinson,  Edward,        .        .        .     248 

~  fallacious  argument 

If  of,  ...        2J9 

- —  relies  upon  a  figure- 

head commission,     249 
'^^    Atlantic  nurseryman,  .        148 

'**'"    Attorney-General  held  that  leg- 
'''  islature  had  not  the   power  to 

^^        prescribe  rates,  .        .        .330 

Attorney,  slow  to  accept  fee,  402 

~^°    Augiistus  instituted  postal  ser- 

260        vice 27 

Australia, 64 

2^'^    Austria 54 

6i^    Average  fares  per  mile,     .        .        444 

B.  &  M.  Co 324 

*36     Baker,  C.W.,  .        .        .         .262 
"'     Balkan  Peninsula,     ...  59 
•          physical   features,  im- 
portant factor,     .  24 

19    Ballou,  H.  S 139 

3^0    Baltimore    and    Ohio,     watered 

324        stock 172 

62    Bankers'  Magazine,      .       .       .    301 

328  Banks   and   insurance,  not   pri- 

100        vate,  403 

303    Barosz,  M., 441 

B.,  C  R.  &  N.   Railroad  Co.,   in- 
313        creased  prosperity  of,    .        .        344 
Beach,  C.  F.,  Jr.,  .        .        .395 

445        law  of  private  corpora- 

119  tions.         ...        316 

97    Bering  Strait,  ....      89 

32    Belgium 56,  409 

449        cost  of  right  of  way,  370 

329  Bessemer's  invention,          .        .    374 
68    Blackstone.T.B 413 

477 


478 


huh 


Blatclifortl,  Jvistice,  .        213,  290 

Blinkensop,  .        .        .        .48 

Board  of  Railroad  CommiHsiori- 

ers, 428 

Bolles.  A.  S 303 

Bonded  debt  of  M.  &  M.  R.  R.,  322 
Boiiham,  John'M.,       .        .        .        268 

Boone, 327 

'Boston  Advertiser,  ...  340 
Bradley,  Justice,  .        .        .    213 

Bralthwaite,        ....  49 

Branch  roads.  ....    306 

Brazil,  69 

Brewer,  Justice,  .        214,  21.t,  4.5.5 

doctrine,      .        .        .     376 

opinion   of    reasona- 

able  rates,    .        .        360 

reply  to  ruling  of,  364 

Bridge  across  the  Mississippi,  319 
British  railways,  cost  of  right  of 

way,  370 

Brown,  Justice,  ....  214 
Bryce,  Prof.,         .         .         .        .391 

on  decadence  of  bar,     .      222 

on  lobby,        .        .         .         222 

Buddvs.  N.  Y.,  .        213,290,295 

Buddha,    commended    roads    to 

cai'e  of  pious,         ...  18 

Burmah 61 

Burstall,  49 

California  railwaj's,  .        .        122 

Calmar,  .  ....     328 

Camden  and  Amboy  charter,  .  113 
Camden    and    Amboy    Railroad 

Company,  .  .  .  .102 
Canada, 73 

canals,      ....        43 

Canadian  Pacific,  .        .        .74 

Canal,  Erie,  ....        40 

from  Bitter  Lake  to  Red 

Sea,         ....        23 

Nicaragua,       .         .        44,  174 

Canals,  Canadian,  •         .  43 

in  Great  Bi'itain,  .        33 

Italian,         .        .        .         .34 

private  companies,       .        42 

Spanish,        .        .        .        .34 

Candidates,  railroad,        .        .        226 

servile  to  railroads,        .    206 

Cape  Colony,       ...         .63 


Capitalization  of  railroads. 
Capital  of  Standard  Oil  Company, 
Carey.  H.  C, 
Carload  lots,    .... 

rates,      .... 

Carthage,  harbor,  fleets,  roads, 
Carthaginians,        .... 

commerce  of,  con- 
structed roads, 

Cars  refused,     .... 

Cassat,  Mr.,  testimony  of,     . 

C,  B.  &  Q.  R.  R.  strike,     . 

Cedar  Rapids  andMlssouri  River 
R.  R.  Co.,        .... 

Central  America, 

Central  Pacific, 

scheme, 

Ceylon, 

Charlemagne  repaired  and  built 

roads, 

Chicago  and  Milwaukee  system, 
cost  of,        .        . 
■ and  Omaha  pool, 

convention, 

Iowa     and      Nebraska 

Railroad, 

third-rate  lawyer, 

Chile,  

Chinese   built  roads   before  the 

Christian  era, 
Classification, 

rule, 

unjust  features, 

Clay,  Mr.  .... 

Clews,  Henry,        .... 

pictures  evils, 

"Twenty-eight  Years 

in  Wall  Streei," 

Clear  Lake,        .... 
Clerk  of  U.  S.  Court, 
Cleveland,  President, 

Clinton 

Club  address  of  C.  F.  Adams,  Jr. 
C,  M.  <fe  St.  P.  R.  R.  Co.  vs.  Minn. 
Coal  and  kindred  articles. 
Coffin,  Mr.  L.  S.,        .        .        . 
Colbert,  idea  of  postal  service,    . 

Coleridge,  Lord 

Combinations,     .... 

regulate,  . 


121 
110 
386 
140 
24 
91 


120 
121 

285- 

324 

70 

175 

347 

61 

28 

235 

194 
224 

328 

222 
68 

21 
363 
361 
151 
303 
304 
404 

185 
328 
217 
359 
328 
257 
213 
386 
452 
30 
454 
189 
299 


Jiuh 


479 


Commission  evil,  .        .  420 

Commission  received.  .  .  119 
Commissioner  system,  .  .  i46 
Commission,  Interstate,  reviews 

Judge  Brewer's  rule,  .  .  365 
Commissions      acquire      expert 

knowledge,    ....     384 
Commission's  decisions,  .  359 

acts    subject    to   judi- 

cial review,      .         .      381 

become  a  pliant  tool,       429 

cliaracter  of,    .        .         359 

Commission  system  adopted  in 

Iowa,  ....  335 

Committee  bill  passed,  .  .  354 
Commodities,  cliaracter  of,  .  373 
Common  law,  svifficient  in  theory 

but  fails  in  practice,  .  .  268 
Competition,        .        .        .         190,  196 

a  great  educator,     .      260 

and  enhanced  rates,   353 

in  United  States  de- 
pended upon,        .        .        .    129 

the  death  of  trade,         298 

vicious,      .        .        .       300 

Communism,  strength  of,  .  454 
Conduit  company,  .  .  .  117 
Confiscation  of  railroads,  .     293 

Conflicts     between     labor     and 

capital,  ....        448 
Congress,  appropriations  for  im- 
proving rivers,        ...       44 
•        in  three  camps,      .         352 

responds  to   demand 

of  Pacific  road,  .         .        183 

to    cease     futile     at- 
tempts,     ....  2998 

Congressmen  imposed  upon,  17 
Connecticut    railroad   construc- 
tion,             288 

Conscientious  managers  cannot 

retain  business,  .        .  399 

Consolidation  of  C,  R.  I.  &  P.  R. 

R.  Co.         .        .         323 

tendency  to,  .         262 

Conspiracies  should  not  be  legal- 
ized,         260 

Conspiracy, 296 

Constitutions  made  for,  .  .  457 
Contests,  expense  of   in    Great 


Britain, 371 

Contributions  to  Pacific  roads,  180 
Control,  suggestions  for,  .  425 
Cooley,  Judge,         .        .        .    315, 359 

in  reference  to  State 

and  National  Commissions,        426 

Corporations,  danger  from,      .      223 

willing     to     pay    for 

questionable  services,        .         222 

Corrupt  practice  act  in  Mass.,  2'23 
Cost  of  American  roads,      .        .     187 

of   building  roads   at 

present,  ....  186 

of    existing     railway 

system,  ....  422 

of  operating  M.   <fe  M. 

R.  R.  322 

of  railroads,     172,  370,  417 

Council  Bluffs,     ....        324 

line  completed  to,      .    323 

Courteous  employes,  .  .  447 
Courts  ordered  restoration  of  Erie 

securities,            ....  170 

should  not  aid,            .  381 

C,  R.  I.'&  P.  Railroad,     .        .  284 

Crosby,  J.  O.,  story  of  tramp,  178 

Crusaders,           ....  92 

Cuba, 70 

Culloui  committee  report,       .  131 

Senator,        .        .        ■        3.53 

Customs  laws,        ....      15 
Dabney,  W.  D.,  drift  toward  rail- 
road centralization,  261 

favors  pooling,        .       261 

favors  State  control,     261 

Darius  I.,  work  on  canal,  .  .  23 
Dartnioulh  College  case,  .      315 

decision,         .     259 

Davis,  C.  Wood,         ...  413 

on  cost  of  roads,      .      187 

Dow-s,  David,  <fe  Co.  ,  .  .138 
Davis,  Jefferson,  plea,  .  .  276 
Delegates  to  conventions,"  .  224 
Demand   in   other  States  for  re- 


Denmark, 

35,  58 

first-class 

passenger 

rates. 

439 

Depew,  Mr. 

.        .        138 

iSO 


Index. 


Depew    says    all    railroad    men 
are  politicians,  .... 
Devices,  various. 
Differentials, 
Discriminations, 

118,  137,  143,   156,  147. 

damaginij, 

in  classifications, 

in  Iowa, 

practiced  openly 

Dillon,  Judge,         .... 

Sidney, 

— —       on  cost  of  Pacific 

roads, 

Directors  and   oflicials  of  corpo- 
rations, .... 

character  of, 

with  personal  interests 

Director-General, 

• — —      should  have  power 
to  remove  managers, 
Distance  disregarded. 
Dividends,         .        .        .  164, 

by  fluctuations, 

Standard  Oil  Company, 

Donations,        .... 

for  benefit  of  public, 

made  bj-  railroad  com- 

panies 

to  Pacific  roads, 

to  railroads. 

Donation  to  road  completed, 
Doud  amendment. 
Dual  government,     . 
Dual  sovereignty  must  be  recog- 
nized  

Dubuque  »fe  S.  C.  Co. 
Dutch  East  India  Comi^aiiy, 
Duties  of  common  carriers. 
Duty  of  state, 
Earnings  diverted, 

of  first  Iowa   railroad, 

gross,  larger  in  United 

States,      . 
.     of  C,  B.  &  Q. 

of  Iowa  roads  increased, 

of   Massachusetts  rail- 

roads, 

-  of  Lake  Shore, 


Earnings  of  Liverpool  and  Man- 
366  Chester,        ...        50 

296  of  Terre  Haute,    .        .    17.=) 

296  of  railroads,        .        .         86 

per  employe,         .        .     372 

,  i6o  per  train    mile   in  the 

248  United    States  a,nd  United 

143  Kingdom,  .        .        .        270 

337  per   train   mile    larger 

331  in  United  States,  .    281 

411     East  India  Company,        .  99,303 

273    Economy  of  fuel,  .        .  375 

Editors,        ....          221, 231 
185       controlled  by  counting- 
room        339 

316  Egyptians,    commerce    of,    con- 
406  structed  roads,        ...      22 

317  Electoral  Commission,     .         .        215 

431  Eminent  domain,  .        .        .      314 
Spelling  on,     .      .    317 

432  Employes  fare  better  under  Gov- 
331  ernment  management, 412 

187  in  Iowa,compeusation,  344 

303  in  Iowa,  number,      .      344 

121  number     of,    in    various 

329  countries,         .         .    371 

376  number   of,  per  mile 

of  road,  .        .     209 

446  number  of,  as  related 

176  to  gross  earnings,      269 

125  organized  for  political 

320  work,         .        .        ,    277 

331  quasi-public  officers,   447 

401  should   have   passes,  209 

England,        .  .        .        .         .99 

425  roads    maintained     by 

324                         statute  and  parish  la- 
97                        bor,        ....     32 
315    English  landlords,        ...     287 
456    Entrance  into  railway    service 
403        regulated,         ....        448 
320    Ericsson, 449 

Erie  Canal 40 

281      Railroad,         .  .  .170 

175    European  and  American  invest- 
264       ments  compared,        .        .        .    371 

European     history      began      in 

175       Greece ~4 

175    Evans,  Oliver 47 


Index , 


481 


Executive  charged  with  con- 
struction and  maintenance  of 
roads  and  canals. 

Executives  influenced 

Experiments  with  wooden  rail. 

Extortion,  effects  of, 

Farmei's"  Alliance, 

Farmei's'  pool 

Federal  agencies,  need  of  im- 
proved      

Federal  courts,  influence  of, 

Ferocity  of  public  opinion  in  the 
West, 

Feudal  features. 

Field,  Justice,        .        .         .      214, 

Fink,  Albert,       .... 

First  rail  tracks. 

First  railroad  survey  in  Iowa, 

Fort  Dodge,        .        .  .        . 

Fortunes,  great, 
made, 

France,  

duty  of  employes, 

first  system  of  roads,  first 

artificial  waterwa.vs,    . 

large  number  of  canals, 

rates      on     freiglit      and 

passengers, 

Frederick  the  Great  built  turn- 
pikes and  canals, 

Frederick  William  IV., 

Free  competition. 

Freight  agent3,       .... 

Freight  carried  by  railroads  in 
the  United  States, 

Friction  under  Iowa  law. 

Galena  and  Chicago  Union, 

Gallatin  advocated  roads  and 
canals, 

Garfield,  President, 

on  Dartmouth   College 

case,        .... 

Garrett,  J.  W., 

Germany,  first  mail  service, 

first  railroad, 

German  instructions  to  employes 
Georgia  prescribed  rates, 

Glenwood 

Gibbon,        ..... 


Gibbon   concerning  postal     ser- 
vice,      ...  .        . 
Goodman,  Mr.,  testimony  of. 
Gospel  of  wealth,       .        .        , 

Gota  canal, 

Gould's  bulldozing, 

Gould,  Jay,  .        .  212,  221, 

on  cost  of  Paci.ic  roads. 

Governor  called  extra  session  of 

General    Assembly, 

importuned, 

of  Iowa, 

influenced. 

Government    owner.ship     draw- 
backs,      .        ,        .        .        . 
Granger  cases,       .... 
Granger,  Judge, 
Granger  law  did  not  retard  con- 
struction,       .        .         .        • 

of  Iowa, 

Granger  laws,  moderate, 

repealed. 

Granger  movement, 

a  necessary 

one, 

spread, 

Granger  s.vstem  in   Vt  iseonsin, 
Grant  and  Conkling, 

Grant,  Judge,        .... 
Great  Britain,  canals, 

crossed  by  Roman 

roads, 

recent    origin    of 

public  roads  and 
postal  service, 

Great  Northern  Railroad  Co.,   . 

Grecian  civilization  passed  to 
Romans  and  then  to  other  na- 
tions,       ..... 

Greek  geographers,  praise  of 
highways  of  Hindostan, 

Gresham,  Judge, 

Grinnell,  Hon.  J.  B.,      . 

Gross  and  net  earnings  In  Iowa, 

earnings,     increase     in 

Iowa,  .  .        287, 

earnings  of  Iowa  roads, 

Hadley,  Prof.  A.  T., 

on  passenger  rates, 

on  State  legislation. 


138 
404 

3,T 

452 
269 
184 

321 
228 
311 
227 

412 
213 
229 

335 
332 
322 
246 

84 

258 
332 
245 
224 
411 
33 


32 

185 


19 
212 
411 
344 

293 
265 
245 

278 
286 


482 


Index. 


Hadley 's  addres  before  Bankers' 

Association,        .        .  284 

ignorance,      .        .        .        287 

mistake,  ...        290 

Hadrian  improved  postal  service,  27 
Hagar,  Mr.,        ....  109 

Hack  worth,  ....        49 

Hale,  Lord  Chief  Justice,        .         316 
Harrison,  President,         .        .        214 

on  watered  stocks,     .     174 

on  Nicaragua  Canal,        44 

Hanseatic  Leagiie,        ...      94 

object,  extent,  power. 

Haul,  length  of,  compared,       .      372 
Hayes-Tilden  contest,       .        .        215 

Hayti, 71 

Hepburn  committee,        .  137,  146 

Hindoo  culture  and  broad  states- 
manship, ....  18 

Hoe  printing-press,            .        .        231 
Holland, 98 

largest  canal  of,       .        .    31 

Hoyt,  J.,&Co 138 

Hudson,  J.  F.,  .         .     250,  266,  407 

Hudson  River  Railroad  accident  451 

Co.,       .     167 

stock 

watering.  167 

Humboldt  said  of  roads  of  Incas,  36 

Hungary, 54 

Hungarian  zone  system,        .  282,  440 
Huntington,  C.  P.,        .        .        .      347 

letter  of,     .  316 

Illinois  canals,        ....      42 

Granger  laws,        .        .      331 

Importance  of  transportation  fa- 
cilities,       .....         17 

Improved   appliances  should  be 
used,         .....        4.50 

Income  of  railroads,         .        .        128 
per  capita,        .        .        .     292 

Increase  of  traffic  under  zone  sys- 
tem  442 

India     supplied     Nineveh     and 
Babylon,  Greece  and  Rome,     .     18 

Individual  entitled  to  full  use,       392 

Inflation, 163 

Influences  at  work  to  create  pub- 
lic sentiment,        .         .         .         294 

Iniquitous  taxation,         .         .        307 


Injunction  asked  for,  .  .  323 
Inspection  service  should  be  es 

tablished -132 

Insurance    provided  for,        .        451 
Interchangeable  1,000-mile  tick- 
ets,         445 

Interstate  Commerce  Act,       85,  349 

■ amended,  358 

approved,  354 

Interstate    Commerce     Commis- 
sion, sixth  annual  report,  160 
Interstate  Commerce  law  attack- 
ed,         162 

Intimidation    of     railroad     em- 
ployes,         226 

Inventors, 126 

Investments,  none  pay  so  well,  248 
Iowa  attorney,        ....     210 

Bill  of  Rights,         .         .         445 

Central     Air  Line,         .        324 

City,  road  built  to,       .      .      319 

Commissioners  enjoined,      343 

Commissioners'    valuable 

service,       .  .         .         336 
Falls  &  S.C.  Co.        .        .        325 

General    Assembly    pass- 
ed maximum  tariff  act,        264 

■  — -  pass- 
ed act  authorizing  commission- 
ers to  make  jrrima  facie  rates,    264 

law,  features  of,         .        .     341 

misunderstanding  of,  342 

-       vindicated,        .  266 

legislation,        .        .        .        319 

politics 311 

^    prosperity  accelerated,     .    345 

railroad  construction,  288 

the  queen,        .         .         .        348 

Irish  tenants,  ....  287 
Iron  strap  rail,  ....  46 
Itaki  Atabeck,  road  seen  to  this 

day 19 

Italy 57 

canals,        .  ...         34 

Jackson,  President,  .        .        367 

Japan, ».    60 

Java,  61 

Jeans,  Mr.  J.  S.,         .        .        .  269 

on  railroad  revenues,  437 

•         on  state  railroad,      .        410 


Index . 


483 


Jefferson's  iuquiries, 
Judges,  servile, 

use  passes, 

Jurists,  eminent, 
Kansas  Midland, 

Kent,  

Kirkinan,  M.  M.  ... 

Labor  orgranizations, 

Labor-saving'  causes. 

Lake  transportation, 

Land  grant  policy,  wisdom  of, 

to  Dubuque  &  S.  C.  R.  R. 

Land   grants  to  Iowa  railroads, 

value  of, 

Languedoe    Canal, 
Lawyer  and  farmer. 
Lawyers,  briefless,    . 

political, 

third-rate, 

Legislation,  .... 

of  California, 

Legislative  campaign  of  1887,     . 

— —       reform  n,eeded, 

reports, 

Lincoln,   President, 

story  of  the  Irishman 

and  the  pig. 

Lines  projected. 

Lobbies  frowned  out   of  legisla- 
tive halls. 
Lobby,        

formidable,     . 

Locomotive,  early  inventors, 

— —        reward  for. 
Long  and  short  haul  clause, 

of  Iowa  law, 

Louis  XIV.,        .... 
Louis  XI.  transferred  postal  ser- 
vice to  state. 

Lowest  rates  in  Europe,    . 
Mails  carried  free  in  France, 
Managers  arrogant, 

concede  necessity  of 

regulation,    .... 

have  lost  influence, 

make  law  odioiis, 

naturally  despotical, 

of  great  parties, 

M.  &M.  R.  R.Co 

Marshall,  Chief  Justice, 


37 
162 
208 
231 
187 
8U 
239 
4(8 
375 
453 
320 
325 
320 
325 

30 
209 
219 
223 
222 
299 
123 
339 
405 
110 
216 

271 

288 

402 
219 
339 
47 
49 
297 
341 


30 
409 
373 
331 

369 
230 
333 
151 
144 
319 
350 


Marshalltown 324 

Massachusetts  Commission,  .  428 
Mathews,  Judge  Stanley,  .  269 
Maximilian    established    postal 

route, 31 

Maximum  charges,  .  .  .  331 
McDill,  Hon.  J.  W.,  as  a  lobbyist  238 
McGregor  grant  resumed,  326, 327 
McGregor  Western  R.  R.  Co.,  .  325 
Means  employed  to  control  legis- 
lation  218 

Mesopotamia,    inhabitants   per- 
fect cart,  ....  19 
Methods  for  control,                   .        402 
— -        impracticable,     .        .      425 

Mexico, 72 

Mileage  of  the  future,       .        .        389 

to  area,      .        .        .     112,389 

to  population,        .        .      292 

Minneapolis    and   Chicago   con- 
ventions         224 

Minnesota  case,        .        .        .  295 

Granger  laws,         .        331 

politics,        .        .        .311 

Missouri  Pacific,  .  .  .  187 
Mitchell,  Alexander,  .  .  .  232 
Modern  doctrine,  Kenfs  rule,  .  314 
Monopoly, 317 

in  transportation,        .     90 

Morgan,  Appleton,  .  .  .  250 
Mortgaging  prohibited,  .  434 
Munn  vs.  Illinois,  .  .  313,  290 
Muscatine,  branch  line  to,  .  319 
Mushroom  millionaires,  •  307 
National  banking  system,  .  303 
National  bureau  should  be  es- 
tablished  431 

National  control,  .  .  .  424 
Nation  inclined  to  follow  beaten 

tracks, 425 

Nations   should  profit  by  e.vper- 

ience, 367 

Napoleon  Company,  .        .        108 

Navigation  act,  .  .  .  .98 
Nebraska  maximum  tariff,  .  346 
Net  earnings  increased  in  Iowa,   265 

in  1890  and  1891,       .        187 

Netherlands,  canals,  .  .  .31 
Net  profit  of  passenger  traffic  in 

United  Kingdom,  .        .  270 


484 


Tndex . 


Nevada, 324 

New  England  railroad  construc- 
tion,       .  ....    288 
New  Orleans      otton  E.xchangre 

case, 360 

Newton, 47 

New  York  c!  nals,  .        .         .41 

New  York  Central,  gross  earn- 
ings,     ....     167 

stock  watering,  .      165 

New  York  delegation,     .        .  224 

Nicaragua 70 

Canal,        .        .         44,174 

Nile,  canals,  roads,  people,  23 

Notice    given    when    rates    are 

changed,          ....  388 
Number  of  employes  per  mile,       372 
—         of  hours"   work  of  em- 
ployes,         372 

Office  of  railroad  public,     .        .     368 
Officers  of  railroads  should   not 

be  allowed  to  use  pro.xies,  432 

should  take 

oath,        .        432 
Officials  not  likely  to  resist  temp- 
tation,         436 

Ohio  canals,  .        .        .        ,        42 

Oliver  Cromwell,        ...  98 

Operating  expenses  reduced,     .     375 
Pacific  railroad,         ...        81 

diplomacy,      .       180 

prejudice,        .        45 

Pacific   i-oads  before   boards   of 

equalization,        .        186 
•         comparative  cost,    186 

cost  to  duplicate,      185 

easy  grade,  185 

indebtedness        to 

Government,        ....       184 

Papin,  constructed  steamboat,       47 

Parliament  compelled  British  rail- 
ways,       .  .        .         .        .        451 

Party  organs,        ....      221 

Pass   abuse,    ruling  of  commis- 
sion,         362 

Pass,  purposes  for  which  given,  209 
should  be  discarded,        .       446 

Passenger    rate-making  princi- 
ple wrong,        ....        439 

Passenger  rates  not  reduced,         375 


Passenger  rates  too  high,        .        438 
Passengers  carried  by  railroads 

in  the  United  States,        .        .     292 
Passengers.  English  third-class,  270 

killed  and  injured,      450 

■         third-class,        .        .    269 

Passes,        ....        207,  208 

plentiful,        .        .         .        420 

to  delegates,         .         .         226 

Pauper    tickets   for    the    clergy 

should  be  abolished,  .  .  446 
Pausanias  shown  well-kept  road,  19 
Pedigree  of  a  proverb,  .  .  298 
Peik  vs.  Chicago,  .  .  .  2W 
Pennsylvania  canals,  .  .  41 
Pennsylvania  Central  R.  R.  Co.  171 
People  prone  to  believe,  .  245 
People's  parties  called  into  ex- 
istence,         404 

People  will  not  tolerate,  .        397 

Perquisites  abolished,        .        .      446 
Persian  Empire,  magnitude^      .      20 

Peru, 67 

roads,        ....        35 

Phoenicians,        .         .  .        .        90 

built    great    roads, 

traders  of  antiquity,        .        .        20 

first  great  maritime 

nation,        ....  19 

Pipe  line,  ....  116,  119 
Plan  capable  of  being  improved,  433 
Policy  of  delay,  .  .  .  381 
Political  campaigns  in  Iowa,  .  3.39 
Politicians  as  railroad  employes,  229 
Pooling,  ....  261,398 
committee  does  not  rec- 
ommend prohibition,        .  354 

contracts  void,     .     .     .    317 

grave  effects  of,         .        268 

means  of  swelling  rail- 
road earnings,     .        .        .         267 

should  be  prohibited,        203 

Pools,  .         85,194,195,251.297 

defended  by  Mr.  Hadley,    247 

defended  by  Mr.  Morgan,   250 

maintained  in  Iowa,        .    336 

suppress  competition,        198 

Poor's,  H.,  opinion,         .        .        .  187 

estimate  of  cost,  86,  173,  247 


Index. 


485 


Poor's    estimate     of      watered 

stock,  .        .        .       If<f) 

Porter,  Horace,  Xort/t  Ainerlcnti 
lieview  article,         .        .        •        '-00 

Porter,  John IDt 

Portugral,  r.K 

Potuguese,  ....  96 

Po.><tal      communication,     royal 

road  from  Siisa  to  Sardes,     .        21 
Postal  service  not  carried  on  by 

state,  .        .        .        .        •         :''0 

Potential  value  of  interstate  law  liliT 

Powderly,  T.  V 419 

Prediction  of  Mr.  Walker,     .       .    399 
Predictions  of  railroad  men,     .      3;12 
Press  abuse,         ....        221 
Press,  efforts  of  railroads  to  con- 
trol,   271 

servile  to  railroads,       .        228 

Prima  facie  rates,  .        .        .    'Ml 

Prize  worth  contending  for,     .       380 
Procopius,    statement     of,    con- 
cerning Via  Appia,     .         .        .     27 

Problem     would     be    solved     if 

abuses, 297 

Providence,        ....  1.36 

Psammitichus  cuts  canal,  .  .  33 
Ptolemaic  kings  built  canals,  .  24 
Public  at  mercy  of  managers,        381 

not  unreasonable,    4,50 

Public  opinion  dormant,        .       .   100 

efforts  to  influence  273 

rules,        .        .        .400 

Publicity  advantageous,        .  402 

Purchasers    of    land    made    the 

donation 321 

Question     not  settled  until   set- 
tled right 377 

Railroad  attorneys,  .  .  .  214 
Railroad-building  after  187.3,  246 

Railroad  business  not  private,      403 

safe,        .       .    436 

changes  in  Iowa,      .        393 

-  company  public  agent,    388 

competition,      .      .     190,  3.38 

— -        consolidation,      .        .        82 

construction,        .        .      287 

diplomate,        .        .        .  228 

first  line,       ...         77 

first  steam  engine,        .     47 


Railroad,  improved  highway, 

like  common  road, 

literature,   . 

—        magazine  literature,     . 

managers     do    not    do 

things  by  halves,     . 

managers'     opportuni- 

ties to  speculate,    . 

men  always  oppose  re- 

ductions of  rates,    . 

officials, 

papers,     .... 

precursor  of, 

president's  letters. 

Railroads,  abandoned, 

bonded   for  more  than 

cost,    . 

capitalization  of, 

but  few    that    do     not 

pay, 

cost  to  build, 

earnings  of, 

in  Asia 

•        in  Austria 

in  Belgium 

in  Denmark 

in  France 

in  Germany 

in   Granger   States   did 

not  comply  with  law 

in  Hungary 

in  Italy 

in  politics, 

in  Portugal, 

in  Russia 

in  Switzerland, 

in  Spain, 

in   the     Balkan    Penin- 

sula, .        .        . — 

in      the     Scandinavian 

Peninsula, 

in  the  United  States, 

in  Turkey, 

land  grants  to, 

partake      of     two     na- 

tures,   . 

propitiate  judiciary 

public  ta.x  collectors, 

rebelled    against    Iowa 

law 


339 
391 
231 
273 

223 

399 

283 
257 
340 

46 
229 

79 


52 
186 
86 
.59 
54 
56 
58 
54 
53 

246 
54 
57 

205 
58 
.58 
56 
.57 


58 
76 
60 
80 

392 
211 
396 

S14 


486 


Index. 


231 

308 

49 

229 

88 

13 

237 


Railroad  stations,  number  of,       190 
Railroad  tax,  amount  of,  .        393 

Railway  acts,  first  in  England,      127 

Railway  Age 288 

Railway  benefits, 

employes  in  politics, 

first  act, 

organs, 

Pan-American, 

Railways,  highways, 

weakened  their  argu- 
ments  

Railway  system,  growth  of,        .     87 

length  of  in  the 

world,        ...         •         .87 
Rate-making  a   legislative   and 

not  a  judicial  function,         .        332 
Rate-making  difticult,        .        .      244 
not  a  judicial  ques- 
tion  378 

Rate  of  1870,        .        •        .         248,249 

per  ton   per  mile  on  Cam- 
den and  Amboy  Railroad,    .        109 

question,  .         •  ■         370 

Rates,  fi-xing  of  by  commission 

demanded,      .        .        .       430 

fundamental      principles 

in  making,     .        .        .        385 

in  France,        .         .    •     .        293 

lower  w'ill  prevail,        .       256 

lower,  reason  for,         .         374 

might  be  reduced,      .      .    417 

on  Milwaukee  road,         .      233 

reduced   by  zone  tariff  in 

Austria-Hungary,       .      .    283 

should  be  lower  here  than 

in    Eui'ope,    .  .        373 

should  be    referred  to  Na- 

tionA-1  and  State  boards,        .       379 

under  Granger  laws       .      246 

under  Wisconsin  Granger 

laws     .         .        .         .236 

-  what  are  reasonable,  -  376 
Reagan  John  H,  bill  of,  .  352 
Reform  demanded  .  .  ,  295 
Reasonable  rates,        .        .      376, 387 

fixing  of,      .     361 

Rebates  Standard  Oil  Company,  1 15 
Redfleld,  J.  F.,        .  .         •         312 


Reduced    rates  on  Government 
business  in  France,        .        .       293 

increased  busi- 
ness,          282 

Refineries  closed,        .        .        .       116 
Reforms  needed,        .        .        .        438 

Remedies 389 

proposed"  by  commit- 
tee  352 

Remedy  proposed  by  Mr.  Hudson 

of  doubtful  efficiency,  .  268 

Reorganization    of  the   M.  &.  M. 

R.  R 322 

Reportof  Cullom  committee,  353 
Reports  of   Interstate     Commis- 
sion,          366 

Revenues  increased  by  Granger 

law 246,  333 

uniform,  .        .         437 

Revolution  and  anarchy,  .  299 
Rhenish  League,  ...  94 
Ricks,  .Judge  ....  449 
Ridgeway,  Jacob  .  .  .  106 
Right  of  control  rests  upon  firm- 
er ground 318 

Right  of  way,  cos- 1  of,  .  .  370 
River  and  harbor  improvements,  453 
Rivers,  improvement  of,  .  .  .  44 
Robber  knights,  .  .  93,  149 
Robbers    and    feudal     knights, 

depredations  being  tax,  .  29 
Rob  Roy 258 

policy,        .  .        .        102 

Robinson,  H.  P.,  railway  in  poli- 
tics  308 

Rocket,  the         ....  49 

Rogers,  Thorold,  .  .  .  454 
Roman   Empire,   after  downfall 

roads  destroyed  ...  28 
Roman  postal  service,  .  .  27 
Romans  learned   art  of  paving 

roads  from  Carthaginians.        24 
Rome, 91 

connecting  link  between 

antiquity  and  mediEBvalism,  24 

extent,  population,  roads, 

etc.,        ....        25 
Roads   built   from    proceeds    of 
stocks  and  bonds,  .         .        373 


1,h1( 


487 


Roads   built  only  when  immedi- 
ately profitable,     . 

early,  .... 

pioneers  of  enlightenment 

and  political  eminence, 
subject  to  legislative  con- 
trol,        .        .  .        . 

utility  of  good,  recogniz- 

ed in  colonial  times,    . 
Russia,        ..... 

roads 

Rutter,  J.  H.,  agent  of  New  York 

Central, 

Salaries,  American  railways  pay 
the  hrghest,        .... 

Saloon  men  politicians, 

San  Domingo,        .... 

San  Salvador,'       .... 

Sanspareil,  the,        .        .        .        . 

Savings  under  Government  man- 
agement,       .... 

Scandinavian  Peninsula,     .     .     . 

Scandinavian  roads  and  canals, 

Schedule  rates  made  by  Iowa 
Commission,        .... 

Schedules  should  be  submitted 
to  bureau.         .... 

Scriptures,  roads  of  the,     .    .     . 

Second-class  passenger  rates, 
why  not  successful, 

Secrecy  a  soiirce  of  evils. 

Select  committee. 

Select  Committee  on  Transporta- 
tion  

Senate  committee. 

Senators  and  Congressmen  raise 
campaign  funds. 

Servility  of  Interstate  Com- 
merce Commission, 

Sesostris  cut  canal, 

Shiijpers  given  favors,  .  219, 
powerless, 

Siou.x  City.         .... 

Smyth   Judge,        .... 

South  America 

Southern  Pacific  Railroad  Com- 
pany,       ..... 

Southern  pool 

Southern  Railway  and  Steam- 
ship Association,  .        .     . 


328 
37 

17 

327 

36 
58 
35 

116 

420 

366 

71 

70 

49 

422 

35 

342 

432 


194 


South  Sea  Company,  .  .  303 
Spain, 57 

canal.s,        .        .        .        •       34 

Spain  and  Gaul,  roads  of,  .  27 
Special  arrangements,  .  .  295 
Special-car  aristocracy,  .  .  445 
Special  contracts,        •        .        .      137 

rate  agreement.        .        .141 

rates,        .        .        .        120,138 

Speed  of  railroads,        .  .    279 

Spelling,  T.  Carl,  ...  317 
Speculative  element  should  be 

removed,  ....  433 
Spectilators  and  gamblers,  .  434 
Spirit  of  Interstate  Law,  .  369 
Standard  Oil  monopoly,        .        .114 

discrimination,  160,  362 

State  control  encourages  build- 
ing,       .        .        .130 

in  Iowa    asserted 

early,        .        .      330 

Spelling  on,        .       318 

State,  duty  of 391 

management,  advantages 

of 410 

•    ownership  and  regulation,  409 

with    private  man- 
agement,        .  422 
— —  railway  system,        .        .       277 
States  to  cease  futile  attempts,    299 
Steam  engine,  first  account,        .    47 

Stephenson 48 

Stevens,  Mr.,        ....        107 
Stewart,  A.  T.,  <fe  Co.,       .         .        138 
Stickney,  A.  B.,  criticises  Presi- 
dent Mitchell's  letter,  23 

his  criticism  of  Iowa 

rates,        ...       343 

his  error,  .         .         256 

favors   entire    control 

by  Nation,        .        .      2.55 

on   interstate  law,      .    255 

on  national  control,       424 

Stock  a  bonus,  .  .  .  434 
Stock  and  bond  inflation,  .  163 
Stockholders 131 

. — —  dissatisfied,        .      112 

interested  in  pub- 
licity,         403 

Stock  market  controlled  by  few,  308 


488 


1)1  dec. 


stocks,  fluctuations  of,        .        .    435 

should  be  paid  in  full,         438 

shrinkage  of  value,        .     284 

Stockton,  R.  F 103 

Stock  watered  50  per  cent.,  .  307 
Stock-watering,        .        .        .  164,  165 

in  America,        .    270 

English,  .         371 

Stock  wiped  out,        .        .  .        326 

Stone,  Governor,  .  .  .  324 
Subordinates  have   to  suffer  for 

superiors,        ...  .        203 

Subsidies, 329 

• — -       to  press,  .        271 

Sunday  trains  restricted.  .  451 
Superintendents  responsible  for 

uncivil  subordinates,  .  447 

Supreme  Court,        .        .         215,  289 

Switzerland 56 

Taney,  Justice,  ....  216 
Tariff  a  tax,        ....         135 

jirepared  by  sworn  officials 381 

Tariffs  impeachable,        .  382 

official,  should  stand  un- 

til proved  unreasonable  382 
Texas  legislation,  .  .  .  346 
Textbooks,        ....  312 

Thiers,  M., 51 

Third-class  passengers  inEurope,443 
Tunes.  New  York,        •        .        .      340 

Tipping, 447 

Traffic  associations,  .  .  149,  300 
Trainmen  should  be  allowed  rest,  451 
Train  mile  earnings,  .        .        269 

Trains,  number  of,  per  mile,  per 
annum,         ....  281 

should  connect        .        .      451 

Transportation  not  a  commodity,  368 
Trevithick,  Richard,  .  ...  48 
Tribune,  Chicago,        .        .        .      244 

New  York,        .        .  340 

Turkey, 60 

Turnpike,  first  American  .  .  37 
Turnpikes  in  Great  Britain,     .        32 

Turnpike  tolls 396 

Twelfth  General  Assembly,  323,  330 
Umpires,  high-priced,  .  .  420 
Unanimous  vote  on  Iowa  law,  .  341 
Union  Pacific,  ....  175 
United  States  Bank,  .  .  303,  366 
Unscrupulous  men  attracted,       390 


Value  of  land  grants,  .  .  329 
Vanderbilt,  ....  82, 452 
Vedas,  testimony  of,        .         .  18 

Venetian  council,        ,        .        .      253 

Venezuela, 66 

Venice, 93 

Via  Appia  and  other  roads,  .  26 
Violations  of  law  encouraged  by 

courts, 430 

Wabash  Railroad,  .  .  .  212 
Walker,  A.  F.,     .        .  294,  295,  311 

Wall  Street,  defense  of,        .        .    340 

managers,      .        .        346 

method,      ...    302 

War, 399 

War  rule 331 

Washington  among  the  first  to 

advocate      internal     improve- 
ments,         39 

Water  courses  as  levelers,  .    453 

Watering  stock,  Mr.  Jeans  on,      270 
—  methods  of,     .     174 

Water  transportation,  .      145 

Watered  stocks,  ...        172 

Hadley  on,        .    247 

Watt   and    Stephenson's    inven- 
tions,          126 

Watt,  James,  ....       47 

Weak  roads  helped,        .        .  344 

Western  candidates,  .        .        224 

Water  classification,  .  .  .  343 
West  Indies        ....  71 

Western  politician  outwitted,     .  225 

pool,  failure  of,  .        200 

Traffic  Association,     .     299 

Union  Telegraph    Com- 
pany,   127 

White  House,  the,  .  .  .  215 
Whitney,  Asa,            ...  81 

Whitney's  cotton  gjin,          .        .      231 
Why  Western  people  do  not  in- 
vest in  railroad  stocks,     "  .        308 
Wells,  David  A.,      .        .        .        .374 
Windom  committee,        .        .  351 

Wisconsin  Granger  laws,  .  331 
Witnesses  recusant,        .        .  134 

Wrecking  roads,  .  .  .  305 
Wrought-iron  rails  patented,  .  47 
World,  New  York,  ...  340 
Zone  tariff 409 

ridiculed,       .       .       441 


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